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2 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

Contents

Message from the Mayor and Chief Executive 5 Council controlled organisations and other interests 131 Introduction from the Mayor and the Chief Executive 6 Hawke’s Bay Museums Trust 132 Hawke’s Bay Airport Limited 134 Our reporting framework 8 NZ Local Government Funding Agency Limited 135 Our reporting framework 9 Other Council Controlled Organisations 136 Monitoring progress 10 Summary non-financial performance 11 Treasury Policy 137 Level One – Future Aspirations 13 Purpose of Policy 138 Level Two – Today’s Commitments 15 Annual Report Disclosure Statement for the year ended Finance at a glance 35 30 June 2020 139 Annual financial overview 37 Financial Reporting and Prudence Benchmarks 140

Key initiatives and projects 40 Independent Auditor’s Report 147 Independent Auditor’s Report 148 Groups of activities 47 Water and Roads 48 Statement of Compliance and Responsibility 152 Safe, Healthy and Liveable Communities 58 Statement of Compliance and Responsibility 153 Economic and Community Development 61 Governance and Support Services 64 Equal Employment Opportunity Policy 154 Equal Employment Opportunity Policy 155 Exercising partnership – Council, Tangata Whenua, Mana Whenua 67 Your Council 156 Exercising partnership – Council, Tangata Whenua, Mana Whenua 68 Directory of Council as at 30 June 2020 157 Directory of Rural Community Board as at 30 June 2020 158 Financial statements 74 Statistical information (Council only) 159 Financial statements 75 Glossary of terms 160 Notes to financial statements 79 Abbreviations 161

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Message from the Mayor and

Chief Executive

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Introduction from the Mayor and the Chief Executive

As the Mayor and Chief This is certainly a year like no other! We would like to acknowledge Bringing safe drinking water to our people continues to be our the way our community managed the challenges of COVID-19 and Council’s number one priority. We are nearing completion of our Executive of Hastings the lockdown. We are proud of the kindness, patience and four-year journey to provide safe and resilient drinking water to our District Council, we are understanding our community showed to help us through this community. This year’s achievements include new water treatment proud to present the difficult time. facilities, a booster pump station and preliminary work for water Our focus is now on our community’s economic and social recovery. storage at Frimley and Eastbourne as well as upgrades to our small 2019/2020 Annual Report. Together with central government and the business community, we community water supplies. are doing everything we can to support our people through the As the government’s pilot for a new place-based housing plan, we recovery. are delivering more homes for our people across Hastings, including The backbone of our economy is our primary sector. Our farming additional social and transitional housing, papakāinga, inner city community has managed through the challenging time of the living and greenfield residential developments. worldwide pandemic as well as coping with the stress and hardship Our city centre will soon be buzzing with investments in city of one of our district’s worst droughts. Our Council was pleased to upgrades and new commercial developments, all of which will support our district’s farming community with a contribution contribute to our city’s transformation. towards extra feed through our regional Mayoral Relief Fund. One of the biggest highlights this year was the re-opening of the Through our recovery actions, we have also supported our town Hawke’s Bay Opera House, Cushing Foyer and Functions on Hastings and city centres to keep people employed. We have initiated the at Toitoi – Hawke’s Bay Arts and Events Centre. This arts precinct is ‘Jobs for Heretaunga’ programme with the Ministry of Social the keystone of our vision to make our city centre a living, buzzing Development to maximise employment opportunities for our space – full of vitality and opportunity to celebrate performing arts, community. Working with Toitoi – Hawke’s Bay Arts and Events culture, diversity and our community’s talents. Centre and our arts community, we are delivering an Arts, Cultural With a new hotel around the corner and our fabulous Eastside Eat and Events Recovery Plan. Street taking off, we are putting the heart and soul into our city We are proud of the progress our Council has made over the past centre. The revitalisation of the Municipal Theatre will be the next year delivering on our community’s priorities. addition to our arts and cultural precinct. Another major milestone for our Council these past 12 months was the opening of two amazing playgrounds in our premier Flaxmere and Cornwall Parks.

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Fabulous community events were held to open the Flaxmere and Cornwall Park playgrounds. The redevelopment of these much- loved parks reflect our Council’s commitment to invest in our public

\ spaces for the enjoyment of our community. These wonderful parks have been well used by many people for generations and their Sandra Hazlehurst Mayor upgrades have achieved national awards. They will meet the needs of families for today and in the future. This year has also seen the start of our new kerbside recycling and rubbish collection service. This has been a significant journey for our Council and one that is hugely important to our community to

reduce the amount of waste we send to landfill. To’osavili Nigel Bickle Chief Executive We are committed to providing our community with a high level of service across all Council operations and facilities while at the same time councillors and staff are very aware of the need to carefully manage costs and keep our rates affordable. We would like to take this opportunity to acknowledge the hard work and dedication of our staff and elected members who work tirelessly to serve our community. We are committed to doing the best for our people and deliver on their goals and aspirations.

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Our reporting framework

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Our reporting framework

In this section you will find a summary of performance followed by detailed performance statements as follows:

Level One Future Aspirations The Council has a three level reporting framework. Level One Future Aspirations – has a future-looking focus and measures Level Two desired trends over time. Levels of Service Customer Experience Measures Level Two Today’s Commitments – is about the commitments made in Key Actions the short term to our community. Level Three Smart Business – is more internally focused and is about the Level Three Council being the best organisation it can be. Asset Improvement Plans (currently being updated)

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Monitoring progress

Year-end progress report on Council’s Long Term OUR STRATEGIC FRAMEWORK Plan Commitments – Planning for a Sustainable Future as at June 2020

Monitor Progress Our Future • Future aspirations Community Outcomes • Today’s commitments − Levels of service − Customer experience • Smart Business OUR VISION Great living, Economic & Community Development Safe, Healthy & Liveable Communities Economic & Social Development Animal Control today and Marketing, Visitor Attraction & Events Aquatic Facilities What We Do Our Strategic Strategic Planning & Relationships Arts & Culture • Economic & tomorrow Approach Building Control Community Strategic Governance & Support Services Building & Property Management Development Finance & Support Services Cemeteries & Crematorium Development Information Technology Community Safety Initiatives • Governance & Customer Service Centre Emergency Management Support Services Governance Environmental Health • Safe, Healthy & Environmental Planning Liveable Communities Water & Roads Housing for the Elderly Roads and Footpaths Libraries • Water & Roads Water Supply Parks & Reserves Urban Stormwater Drainage Solid Waste Sewage Collection, Treatment & Disposal Venues

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Summary non-financial performance

Introduction In brief the Council’s achievements are as follows: The pages which follow outline in detail how the Council has progressed against its Levels of Service (65 measures) performance management framework within its 2018-2028 Long Term Plan. This report Fully Substantially achieved Not marks the second year of reporting against the 2018-2028 Long Term Plan. A summary Group of activities achieved (98.5%-99%) achieved of our progress at the end of Year Two is as follows: Water & Roads 11 (50%) 1 (5%) 10 (45%) Level One: Future Aspirations Safe, Healthy & Liveable Communities (Note i) 15 (68%) 2(9%) 5 (23%) The information on progress toward future aspirations is best measured by shifts over Economic & Community Development (Note ii) 8 (80%) - 2 (20%) time. These measures are largely on track. Governance & Support Services 7 (88%) 1(12%) -

Level Two: Today’s Commitments Notes: Key actions i. The Toitoi Hawke’s Bay Arts & Events Centre is not applicable at this time due to the closure of the Theatre and Municipal Building during part of 2019/20. The Food Safety measure has been superseded by the There are 27 key actions contained within the Long Term Plan 2018-2028. All actions are introduction of the Food Act 2014. on track or completed. ii. The level of service measure in relation to the Toitoi Hawke’s Bay6 Arts & Events Centre is not applicable at this time due to the partial closure of the Theatre and Municipal Building during 2019/20. Levels of service and customer experience

There are 72 measures focused on the annual commitments made to the community. They relate both to the things Council provides (Levels of Service) and to how the Customer Experience (7 measures) customer interacts with Council’s services (Customer Experience). The aim of Council is Fully Substantially achieved Not to fully achieve/substantially achieve these. For reporting purposes, we group our Group of activities achieved (98.5%-99%) achieved activities into the following groups: Governance and Support Services 2 (100%)

• Water and Roads Safe, Healthy & Liveable Communities (Note i) 1 (25%) 3 (75%) • Safe, Healthy and Liveable Communities Note: • Economic and Community Development i. Parks user satisfaction was not measured in 2019/20.

• Governance and Support Services

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Customer Service Centre: Mystery Shopping Yearly Comparative Performance – Contact Centre Mystery Shopper Results A mystery shopper programme continues with ‘shoppers’ visiting Council to measure CONTACT CENTRE MYSTERY SHOP RESULTS the service delivered against a set of pre-determined criteria. The assessment focuses on the surroundings in the centre, wait times, interaction with the customer and subject 100% knowledge. The standards are high, staff strive to create a welcoming environment and ensure all customers are able to easily access the services or information required. 90% Yearly Comparative Performance – Customer Service Centre Mystery Shopper Results CUSTOMER SERVICE CENTRE MYSTERY SHOP RESULTS 80% 100% 70% 90% 90% 87% 89% 82% 85% 90% 60%

80% 50% 94% 94% Annual Average Score 70% 90% 88% 86% 83% 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

60% Level Three: Smart Business 50% Asset improvement plans Annual Average Score A significant amount of Council’s expenditure is allocated to maintaining the core assets 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 for the community. There are a number of priority improvement items across the key asset areas that are well on track. The main 2019/20 improvement activities included: Note: The 2017/18 result is skewed by an isolated mystery shop issue which has been resolved • The 3W Service Assurance Team has been established and supports the 3Waters Contact Centre: Mystery Shopping Team. Mystery shop calls are carried out in partnership with the Palmerston North City • The Water Strategy and related programmes have been developed and are now in Council, enabling shared learning whilst minimising on-going survey costs. Topics are the implementation phase. focused on regular customer enquiries, including rubbish collection, dog registration, • direct debits, parking infringements and rate rebates, with each call assessed in relation The Stormwater model build has commenced and work on this continues into the to the customer experience and subject knowledge. Although individual call results vary, 2021 LTP period. the team’s annual average score (outlined opposite) remains consistently high. • Detailed Programme Business Case completed and included within the Transportation Asset Management Plan.

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Level One – Future Aspirations

Water & Roads Future aspirations Baseline performance Future target Progress FGO1 Modal shift to Under Development Under Development • Not Measured – Next Census will be in 2023 and we will report on progress at that walking/cycling. (to be measured by new (incremental increase over time. census question). census periods).

FG02 Annual shift to Under Development Under Development • Not Measured – Next Census will be in 2023 and we will report on progress at that walking and cycling. (now measured from nine (incremental increase over time. permanent count sites). previous periods).

FGO3 Street lighting Installed wattage 20% reduction by 2022. • Achieved efficiency. (2.6kw/km). • 5852 out of 7100 streetlights now converted to LED. • Pre LED install power consumption was 3255 Mwh/year, Post install of LED predicted power consumption estimated at 2200 Mwh/year. Power consumption

3,500

3,000

2,500

2,000 Mwh 3,230 1,500 2,880 2,587 1,000

500

0 2017 2018 2019

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Safe, Healthy & Liveable Communities Future aspirations Baseline performance Future target Progress FGO4 Public buildings meet 62.04% 100% by 2033 meeting On Track – 91.4% minimum earthquake future legislative standards. (Note; the legislative timeframe for completion of assessments and any remediation that standards (34% of new may be required does not end until 1 July 2037, the remaining 8.6% of building owners building standard). may elect to use all this time). New legislation Subpart 6A—Special provisions for earthquake-prone buildings captures buildings in the Hastings district that need profiling against the new EPB methodology. • 1639 buildings constructed prior to 1976 have been profiled to date; of these buildings 334 currently fall within the profile categories of the EPB methodology and are/were therefore potentially earthquake prone. • 1305 buildings constructed between 1935 and 1975 fall outside the scope of any requirements for assessment/strengthening (under the Act). • Of the 334 buildings, 193 are excluded because they have been assessed or strengthened to ≥34% NBS, or are timber frame buildings. • Of the 334 buildings, 129 buildings have been identified as potentially earthquake prone (building owners are required to have seismic assessments completed following notification by Council). • Of the 334 buildings, 12 buildings have been confirmed as earthquake-prone (1 is currently being strengthened and 1 has planned strengthening works scheduled). FG05 Increased recyclables 9,800 tonnes diverted ≥ 11,760 tonnes per annum • Not Achieved – 7,513 tonnes (15%) diverted, decrease in tonnage is a result of the diverted from landfill. by 2024 (20%). suspension/closure of facilities and services over the Covid-19 lockdown period. The diversion percentage is calculated by comparing the diverted tonnage against the annual landfill tonnage which is split 50/50 between the Hastings District Council and Napier City Council. FGO6 Decreased organic 28,580 tonnes ≤ 19,150 to landfill by 2024 • On Track – 25,431 indicative tonnes (28.4%) – Solid Waste Analysis Protocol Survey waste going to landfill. (30%). undertaken March to May 2019.

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Level Two – Today’s Commitments

(A) LEVELS OF SERVICE Water Services Detailed Mandatory Non-Financial Performance Measures (Department of Internal Affairs) The performance measures in the tables below are required to be reported in accordance with section 261B of the Local Government Act 2002. The baseline performance is based on 2018/19 actual information (unless otherwise stated). Stormwater Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement LOCAL Council will provide a DIA Non-Financial Performance Measure 1 – 0 (zero) 0 (zero) floors affected per Achieved – 0 (zero) number of INFRASTRUCTURE safe and reliable System Adequacy 1,000 connections up to a 1 habitable floors affected. stormwater service The number of flooding events that occur in the in 50 year ARI storm event. To provide local and ensure that Council’s district. For each flooding event, the infrastructure which service interruptions number of habitable floors affected (expressed per contributes to public are kept to a 1,000 properties connected to the Council network). health and safety, minimum. supports growth, DIA Non-Financial Performance Measure 2 – 0 (zero) Not Achieved – connects communities, Discharge Compliance 1 (one) Infringement Notice activates communities Compliance with Council’s resource consents for $750 Infringement Fee and helps protect the discharge from its stormwater system measured by Related to sediment laden water being natural environment. the number of: discharged into the Karamu Stream as a) Abatement notices 0 (zero) Abatement notices a result of dewatering an excavation at b) Infringement notices 0 (zero) Infringement notices a Council construction site. c) Enforcement orders 0 (zero) Enforcement orders 0 (zero) abatement notices, enforcement notices or convictions. d) Convictions 0 (zero) Convictions DIA Non-Financial Performance Measure 3 – 1 hour 1 hour Achieved – No ‘flooding event’ Response Times recorded, so no response required. The median response time to attend a flooding However, the response time to general event, measured from the time that the Council surface flooding was 33 minutes. receives notification to the time that service personnel reach the site.

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Stormwater Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement DIA Non-Financial Performance Measure 4 – 10.1 15 complaints per 1,000 Achieved – 10.1 complaints per 1,000 Customer Satisfaction connections. connections. The number of complaints received by Council NB: This is a baseline figure for This performance measure includes about the performance of its stormwater system, stormwater-related complaints only verified complaints per 1,000 expressed per 1,000 properties connected to the received in the past 8 years. connections; it is acknowledged that Council’s stormwater system. not all complaints have been captured. The total number of complaints received are not verifiable because: • Some calls were not categorised into water supply, stormwater or wastewater. • Some calls have not been recorded as they were subsequent calls to the original complaint and the caller did not request for their complaint to be recorded. • Insufficient details to assess what the nature of the call was for. In particular, if the call should be classified as a complaint or request for information. To resolve the issues identified, the Council will work with its call centre, water services team, contractor and after-hours provider to ensure integrity of the data received is compliant with DIA mandatory performance reporting and make system changes to allow all subsequent complaints to be captured.

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Sewerage and the Treatment and Disposal of Sewage Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement LOCAL Council will provide a DIA Non-Financial Performance Measure 1 – 0.89 5 per 1,000 connections Achieved – 0.79 overflows per 1,000 INFRASTRUCTURE safe and reliable Number of dry weather sewerage overflows from per annum connections per annum. Council Objectives to wastewater service the Council’s wastewater system, expressed per which the wastewater and ensure that 1000 sewerage connections to that sewerage activity relates: service interruptions system. are kept to a • Healthy drinking DIA Non-Financial Performance Measure 2 – 0 (zero) Not Achieved – minimum. water and sanitary Compliance with Council’s resource consents for 1 abatement notice and 2 services. discharge from its sewerage system measured by infringement notices were received for • Sustainable use of the number of: 2019/20. water resources. (a) Abatement notices 0 (zero) Abatement notices Overflow from the domestic • Infrastructure wastewater network into the Te (b) Infringement notices 0 (zero) Infringement notices supporting Kahika Stream due to tree roots economic growth. (c) Enforcement orders 0 (zero) Enforcement orders resulted in 1 abatement notice and 1 • Resilience to (d) Convictions 0 (zero) Convictions infringement notice for $750. hazards and Discharge to land from the Clive shocks. WWTP resulted in 1 infringement notice for $1000. DIA Non-Financial Performance Measure 3 – Achieved – Where the Council attends to sewerage overflows resulting from a blockage or fault in the Council’s sewerage system, the following median response times are measured: (a) Attendance time: From the time that the 30 minutes 1 hour response time to site 36 minutes response. Council receives notification to the time that (attendance time) service personnel reach the site, and (b) Resolution time: From the time that the Council 2.1 hours 1 day permanent repair 2.45 hours resolution time. receives notification to the time that service completed (resolution time) personnel confirm resolution of the blockage or other fault reach the site.

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Sewerage and the Treatment and Disposal of Sewage Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement DIA Non-Financial Performance Measure 4 – 26.9 30 complaints – Count Achieved – 20.43 complaints per 1,000 Total number of complaints received by the Council expressed per 1,000 connections per annum. about any of the flowing: connections per annum This performance measure includes (a) Sewage odour only verified complaints per 1,000 connections; it is acknowledged that (b) Sewerage system faults not all complaints have been captured. (c) Sewerage system blockages The total number of complaints (d) The Council’s response to issues with its received are not verifiable because: sewerage system • Some calls were not categorised Expressed per 1,000 connections to the Council’s into water supply, stormwater or sewerage system. wastewater. • Some calls have not been recorded as they were subsequent calls to the original complaint and the caller did not request for their complaint to be recorded. • Insufficient details to assess what the nature of the call was for. In particular, if the call should be classified as a complaint or request for information. To resolve the issues identified, the Council will work with its call centre, water services team, contractor and after-hours provider to ensure integrity of the data received is compliant with DIA mandatory performance reporting and make system changes to allow all subsequent complaints to be captured.

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Water Supply Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement

LOCAL Water Supply – DIA Non-financial performance Measure 1 NZ drinking water standards INFRASTRUCTURE Ensuring healthy – (safety of drinking water) Please note: These results are drinking water Council Objectives to The extent to which the local authority's drinking provisional, pending final through the which the water supply water supply complies with: confirmation by the independent provision and drinking water assessor. activity relates: effective (a) Part 4 of the drinking-water standards (bacteria Part A – 100% Percentage A: Part 4 Bacteria compliance criteria • Sustainable use of management of compliance criteria), and Compliance 100% Achieved – land and water water services. All Hastings District Council water resources. supplies were assessed as compliant • Healthy drinking with Section 4 (Bacteriological water and sanitary compliance criteria) of the DWSNZ services. 2005 (Revised 2018) • Infrastructure (b) Part 5 of the drinking-water standards (protozoal Part B – Not Target 100% B: Part 5 Protozoa compliance criteria supporting compliance criteria). Achieved Not Achieved – economic growth. Supplies compliant with part 5 of the DWSNZ for the reporting period – • Resilience to Portsmouth Road, Whakatu, Clive and hazards and Haumoana/Te Awanga (Compliant shocks. with Secure bore water criteria). • Serviced land for Omahu, Brookvale Road (Havelock industrial North) and Wilson Road (Flaxmere) development. (Compliance with Cartridge Filtration and U.V disinfection criteria where applicable). Detailed investigations and risk assessments of the Hastings groundwater sources in 2017 and 2018 resulted in the reclassification of many of Hastings District Council’s water sources to a non-secure status. This now necessitates treatment to fully meet the protozoal compliance criteria in the DWSNZ.

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Water Supply Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement The HDC Drinking Water Strategy will deliver new compliant treatment systems to all supplies for the 21/22 reporting period. Waipatiki, Parkhill, Waipatu, Eastbourne and Frimley are all now deemed non-secure groundwater sources and therefore require protozoa treatment to comply. Whirinaki, Esk and Waimarama have existing filtration and UV disinfection systems in place but require upgrades to meet the technical requirements of the DWSNZ. DIA Non-Financial performance Measure 2 – 21% as measured in 20% Not Achieved (maintenance of the reticulation network) June 2016. Percentage real 21% losses or other The NZWWA Water Loss Performance The percentage of real water loss from the local recognised industry “Benchloss” spreadsheet tool was authority's networked reticulation system. standard as used to evaluate water loss for the (including a description of the methodology used to calculate this). specified in the Hastings Urban Water Supply Hastings District (accounts for 94% by population and Council’s ‘Water 92.5% by volume). Conservation and Demand Further work on improving data Management accuracy to inform our water loss Strategy’. assessments and evaluate further opportunities to reduce water losses via network leakage is being investigated. (At 95% confidence limits, the water loss result has a level of uncertainty of +/-34.2%.

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Water Supply Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement DIA Non-Financial performance Measure 3 – 95% achievement (fault response times) rate. Where the local authority attends a call-out in response to a fault or unplanned interruption to its networked reticulation system, the following median response times are measured: (a) attendance for urgent call-outs: from the time that 45 minutes Urgent – 1 hour Achieved – The median time to the local authority receives notification to the time response time to respond to urgent call-outs was 41 that service personnel reach the site, and site (Note i). minutes. (b) resolution of urgent call-outs: from the time that 2.52 hours Urgent – 2 hour Not Achieved – The median the local authority receives notification to the time restoration of restoration time was 2.32 hours. that service personnel confirm resolution of the service. fault or interruption (c) attendance for non-urgent call-outs: from the time 20 hours Non-urgent – 3 days Achieved – 18.5 hour response time that the local authority receives notification to the response time to site time that service personnel reach the site, and (Note i). (d) resolution of non-urgent call-outs: from the time 3 days Non-urgent – 7 days Achieved – 2.24 day resolution that the local authority receives notification to the call resolution time that service personnel confirm resolution of the fault or interruption. DIA Non-Financial performance Measure 4 – 9.24 3 Not Achieved – There were 9.22 (customer satisfaction) Count expressed complaints per 1,000 connections. The total number of complaints received by the local per 1,000 This performance measure includes authority about any of the following: connections per only verified complaints per 1,000 (a) drinking water clarity annum connections; it is acknowledged that (b) drinking water taste not all complaints have been captured. (c) drinking water odour The total number of complaints (d) drinking water pressure or flow received are not verifiable because: (e) continuity of supply, and

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Water Supply Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement (f) the local authority’s response to any of these • Some calls were not categorised issues expressed per 1,000 connections to the into water supply, stormwater or local authority's networked reticulation system. wastewater. • Some calls have not been recorded as they were subsequent calls to the original complaint and the caller did not request for their complaint to be recorded. • Insufficient details to assess what the nature of the call was for. In particular, if the call should be classified as a complaint or request for information. To resolve the issues identified, the Council will work with its call centre, water services team, contractor and after-hours provider to ensure integrity of the data received is compliant with DIA mandatory performance reporting and make system changes to allow all subsequent complaints to be captured.

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Water Supply Community Level of Service Performance Baseline 2019/20 2019/20 Outcomes Statement Measure Performance Target Achievement DIA Non-performance Measure 5 – 500 410 litres per day Not Achieved – (demand management) per resident. 420 litres per person per day for the The average consumption of drinking water per day Hastings Urban Water Supply. per resident within the territorial authority district. This is 2.5% higher than the target and is a 16% reduction over our baseline performance. Pressure reduction to reduce network leakage is being implemented as part of the Drinking Water Strategy in 2021. Our water conservation practices are in place each year to educate and monitor household usage. An extended summer left many parts of the district suffering from drought which has influenced water consumption figures in the reporting period. Water restrictions were implemented in mid-December and were not fully removed until early June.

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Roads and Footpaths Detailed Mandatory Non-Financial Performance Measures (Department of Internal Affairs) The performance measures in the tables below are required to be reported in accordance with section 261B of the Local Government Act 2002. The baseline performance is based on 2018/19 actual information unless otherwise stated. Community Performance Baseline Target Achievement Outcomes Measure Performance 2019/20 2019/20 LOCAL INFRASTRUCTURE DIA Non-Financial Performance Measure 1 – 36 Reducing trend of fatality Not Achieved – 39 fatalities and serious Council Objectives to which Road safety and serious injury from injuries during 2019/20. the transportation activity The change from the previous financial year in the number of previous year. relates: fatalities and serious injury crashes on the local road network, (Base level for 2017/18 = 40 fatalities and serious crash injuries • Accessible range of safe expressed as a number. on the local road network) transport options DIA Non-Financial Performance Measure 2 – 93.2% 90% smooth travel Achieved – 91% smooth travel exposure • Safe walking and cycling Condition of the sealed road network exposure. in 2019/20. facilities The average quality of ride on a sealed local road network, (Average quality of ride) • Infrastructure measured by smooth travel exposure. supporting economic DIA Non-Financial Performance Measure 3 – 7.0% 5.5% of sealed local road Not Achieved – 3.23% of local road growth Maintenance of a sealed local road network network is resurfaced per network resealed in 2019/20. The sealing • Efficient movement of The percentage of the sealed local road network that is annum. programme was impacted by the COVID- goods resurfaced. 19 lockdown. DIA Non-Financial Performance Measure 4 – 1.16% No more than 1.5% of Not Achieved – 1.93% of footpaths Condition of footpaths within the local road network footpaths classified poor or classified as poor or worse as measured The percentage of footpaths within a territorial authority worse as measured by through footpath rating survey in district that fall within the level of service or service standard Council’s condition rating September 2018 (measured tri annually). for the condition of footpaths that is set out in the territorial system. authority’s relevant document (such as its annual plan, activity management plan, asset management plan, annual works programme or Long Term Plan). DIA Non-Financial Performance Measure 5 – 91% 95% of customer service Substantially Achieved – 94.7% of Response to Service Requests requests relating to roads customer requests responded to within The percentage of customer service requests relating to roads and footpaths responded 28 days. and footpaths to which the territorial authority responds within to within 28 days. the timeframe specified in the Long Term Plan.

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Safe, Healthy and Liveable Communities Council Performance Baseline Performance Target Achievement Outcomes Measure 2018/19 2019/20 2019/20 COUNCIL OBJECTIVE: Hours of operation at refuse transfer station. 7 days per week. 7 days per week. Not Achieved – There were no closures Reducing public nuisance and longer than 3 hours for essential threats to public safety. commercial customers. However, the refuse transfer station was closed to the general public and non-essential commercial customers during the Covid-19 level 4 lockdown. Hours of operation at recycling depots. 7 days per week. 7 days per week. Not Achieved – All recycling depots were (24 hour operation at Martin Place) (24 hour operation at closed during the Covid-19 level 3 and 4 Martin Place) lockdown. With the exception of Martin Place all drop-off depots remained open outside of the level 3 and 4 lockdown period. Martin Place did not open after the level 4 lockdown to due to Health & Safety concerns raised by the contractor and council officers. Hours of operation at landfill. 1 landfill 1 landfill Achieved – The landfill was open 100% of (limited weekend opening) (limited weekend opening) its scheduled opening hours. Additionally, the landfill is now opening every Saturday morning. As an essential service the landfill did not close during the Covid-19 lockdowns. % of urban dwellings serviced by kerbside refuse Weekly collection to 100% of Weekly collection to Achieved for refuse collection – All and recycling services. dwellings within collection 92% of urban dwellings. properties in the collection zones were zones. serviced throughout the year (representing 92% of urban dwellings). Recycling collections were suspended during the Covid-19 level 4 lockdown, otherwise all properties in the collection zones were serviced (representing 92% of urban dwellings). % compliance with landfill conditions. 100% 100% Achieved – Full compliance was achieved by the Omarunui Landfill with consent conditions.

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Safe, Healthy and Liveable Communities Council Performance Baseline Performance Target Achievement Outcomes Measure 2018/19 2019/20 2019/20 % of food premises having an excellent or very good Not measured 95% Not Measured – Has been superseded by the grading. Food Act 2017. % compliance with swimming pool fencing regulations. 99.6% 98% Achieved – 99% compliance (4 non- complying out of 2,728). Number of public cemeteries. Four cemeteries at Hastings, 4 Achieved – 4 public cemeteries with Havelock North, Puketapu, development plans for further capacity at Mangaroa. Mangaroa. Compliance level with crematorium consent conditions. 32 out of 34 All conditions met. Achieved – 34 out of 34 consent conditions met. % of public buildings with current warrant of fitness. 100% 95% Achieved – 100% of buildings with current warrant of fitness. COUNCIL OBJECTIVE: % of dog registrations of known dogs. 94.5% 98% Not Achieved – 93.5% Covid-19 prevented Reduce public nuisance and staff processing unregistered dogs from threats to public safety. March 2020. % release rate of impounded dogs suitable for adoption. 64% 80% Not Achieved – 69% All dogs suitable for adoption were home placed. Number of night time compliance operations on licensed 4 4 Achieved – 4 night time compliance premises per year. operations undertaken (includes after hours monitoring). Number of CCTV camera locations. 69 32 Achieved – There are 210 camera feeds at 72 locations strategically located to monitor and prevent crime and to promote public safety. COUNCIL OBJECTIVE: A District Plan current at all times within statutory Achieved Achieved Achieved – District Plan made partially • Sustainable use of land timeframes. operative in March 2020. One appeal remains outstanding, waiting decision from and water resources the Environment Court. • A more compact urban form.

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Safe, Healthy and Liveable Communities Council Performance Baseline Performance Target Achievement Outcomes Measure 2018/19 2019/20 2019/20 COUNCIL OBJECTIVE: Number of public swimming pools that meet Pool Safe 4 4 Achieved – All four pools met the Pool Safe • Places and spaces for water quality standards. Water Standard. recreation Days of operation of public libraries. 3 public libraries 3 public libraries Not Achieved – The post-COVID environment constrained achievement of • Places and spaces for (6 day service Flaxmere/Havelock (6 day service Flaxmere/ North, 7 days Hastings) Havelock North, 7 days full hours of opening for Q4 of 19/20. All arts, culture, learning Hastings) sites open six days only and fewer open • Fostering recreational hours each day than before lockdown. participation % of urban properties within 500m radius 87% 88% Substantially Achieved – 85% – While this (walking distance) of a park. achievement measure shows a slight decline • Fostering the arts and it will increase as new development areas cultural experience vest new reserves in next two years. % of urban properties within 500m radius 60% 60% Substantially Achieved – 58% – While this (walking distance of a playground). achievement measure shows a decline on the previous year, it reflects a playground deficit due to new house builds and existing dwellings, which will be addressed with new playground builds planned for the St Aubyn Street reserve and Lyndhurst areas in the new year. Number of elderly housing units and average occupancy. 220 units with occupancy of 95% average Achieved – The average occupancy in 98.52%. occupancy. 2019/20 was 97.79%. Number of Art Gallery exhibitions per annum. 13 12 Achieved – 12 exhibitions undertaken during 2019/20. Opera House Qualmark Rating. Not measured Facility is closed Not Measured – The facility will next be (subject to current review) subject to the Qualmark rating classification after its first full year of operation. % of Indoor Sports Centre available booking hours 73% 50% Achieved – Available booking hours in booked. 2019/20 were 69%. Days of operation of Splash Planet. Mid November to Waitangi Mid November to Achieved – Open 11 November 2019 till 9 Day. Waitangi Day. Feb 2020 7 Days, then Weekends only until (7 days a week) (7 days a week) 15 March 2020. Closed 2 weeks early because of COVID 19.

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Economic and Community Development Baseline Performance Target Achievement Council Outcomes Performance Measure 2018/19 2019/20 2019/20 COUNCIL OBJECTIVE: % of vacant industrial land. Achieved – 65 ha of A minimum of 20% of Achieved – There has been considerable • Residential development industrial land at Omahu and industrial land is uptake of the recently rezoned land at Omahu opportunities 91 ha at Irongate. There is vacant. and Irongate. The remaining industrial vacancy also a further 8.7 ha at the rates which achieve the target are: • Industrial development Tomoana Food Hub. Omahu 33.5 ha opportunities 65.2 ha of vacant land Irongate 54.7ha remains at Irongate, 56.6 ha Whakatu 29.1ha at Omahu, and 52.3 ha at Whakatu. These figures Tomoana Food Hub 8.7ha confirm that the target is exceeded. Number of hectares of vacant greenfield land. Achieved – 20 ha A minimum of 20 Achieved –Total undeveloped or unbuilt vacant land remaining at hectares vacant capacity of residential zoned and serviced land (Lyndhurst, Northwood and greenfield land. at Lyndhurst Waingakau, Northwood and Arataki). Waingakau of 15 Arataki stood at 424 at the end of the first 2 ha. 55 ha of vacant land at quarter of 2020. At a density average of 700m per site this equates to a net 30 ha or a gross Iona and 21 ha of vacant area of 36 ha at density of 11.5 per ha. In land at Howard Street. addition, there are two new rezoned areas comprising 55 ha of vacant land at Iona and 21 ha of vacant land at Howard Street. There is also vacant greenfield land at Te Awanga. Number of significant strategies completed per annum. 0 1 Not Achieved – No significant strategy reviews were scheduled or completed in 2019-2020 due to ongoing commitments to the HBRC led Greater Heretaunga Freshwater Management and Coastal Hazards Strategies. A Housing and Business Land Capacity study was however completed along with a Regional Industrial land Strategy. Measure needs review. Number of structure plans completed per annum. 1 1 Achieved – A structure plan for Brookvale Urban Growth area was completed in June 2019.

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Economic and Community Development Baseline Performance Target Achievement Council Outcomes Performance Measure 2018/19 2019/20 2019/20 COUNCIL OBJECTIVE: Opera House Qualmark Rating. Not measured Facility is closed. Not Measured – Toitoi HB Art & Events Centre Appealing visitor destination. (subject to current review) opened in March 2020 and closed again that month due to COVID19 with re-opening July 2020. Expectation is application for Qualmark rating will be completed after a year in operation with the Municipal Building on board. Prior to that we will finalise processes and monitoring systems and have a year of Municipal Building completion tracking, measuring and monitoring so we have sufficient data recorded for our first Qualmark inspection. Number of visitors to i-Site visitor centres per annum. 58,556 73,000 Not Achieved – 46,416 total visitations to Hastings and Havelock North I-sites combined. Total financial support to events. $611,427 $125,000 Achieved – A total of $459,193 was allocated to support circa 50 events during the 2019/20 year. Total visitors to Splash Planet. 113,347 total 100,000 total Achieved – 116,494 total visitation. 64,607 from outside 45% from outside 64,712 from outside Hastings (56%). Hastings (56%). Hastings. COUNCIL OBJECTIVE: Total financial support to Business Hawke’s Bay. $100,000 $100,000 per annum Achieved – $100,000 funding support and Supporting and attracting funding support to continued collaboration with Council E.D. business. Business Hawke’s Bay. team. COUNCIL OBJECTIVE: Number of completed Place Based Plans. 2 1 Place Based plan Achieved – Waipatu place based plan • Putting people at the completed per completed in 2019/20. centre of planning and annum. service Number of Social Development Reviews completed. 0 1 Social Development Achieved – Multi Cultural Strategy completed • Effective working Review completed in 2019/20. relationships with mana per annum. whenua

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Governance and Support Services Baseline Performance Target Achievement Council Outcomes Performance Measure 2018/19 2019/20 2019/20 COUNCIL OBJECTIVE: % Compliance with statutory planning processes. 100% 100% Achieved – No breaches of statutory Putting people at the centre compliance during 2019/20. of planning and service. Council and Committee agendas are available within 100% 100% Achieved – All Council and Committee (Make open, inclusive and effective statutory timeframes. Agendas met statutory timeframes. decisions) COUNCIL OBJECTIVE: Complete Annual Report and audit within statutory Achieved Achieved Achieved – 2018/19 Annual report audited Ensure prudent financial timeframes. and adopted within statutory timeframes. management. Budgets are set within Financial Strategy limits. Achieved Achieved Achieved – the 2020/21 Annual Plan was completed on time and set within Financial Strategy limits despite the interruption of the COVID-19 pandemic. COUNCIL OBJECTIVE: Calls to Council’s main number are always answered by a Achieved 90% of calls answered Achieved – 90% of calls answered within 60 Putting people at the centre person rather than an answer phone service. (93% of calls answered within 60 seconds. seconds. within 60 seconds) of planning and service. Customer service centre open from Monday to Friday Achieved Achieved Substantively Achieved – Service centre (Ensure easy access to Council rd knowledge and services) 8am to 5pm. closed during COVID lockdown (March 23 – May 14th); subsequently reopened at reduced hours of 9am – 5pm Monday to Friday. % of calls to Council’s main number answered within 20 88% 80% Achieved – 84% of calls answered within 20 seconds. seconds. Usage of Council website. 16,341 unique visitors 15,000 unique visitors Achieved –21,052 unique visitors per month. per month. per month.

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(B) CUSTOMER EXPERIENCE Customer Experience – Safe, Healthy and Liveable Communities Baseline Performance Target Achievement Council Outcomes Performance Measure 2018/19 2019/20 2019/20 COUNCIL OBJECTIVE: Time taken to process a building consent. 99.9% within 20 working 100% within 20 working Not Achieved – 87.2% processed within 20 • Reduce public nuisance and days. days. working days. As can be seen from the threats to public safety. achievement percentage, the COVID-19 pandemic impacted on inspections as our • Putting people at the centre inspectors had a period where they were of planning and service. unable to go out on site. Time taken to process code of compliance. 99.9% within 10 days. 100% within 10 days. Not Achieved – 95% within 10 days. As can be seen from the achievement percentage, the COVID-19 pandemic has impacted to a minor degree on processing times and Code Compliance Certificates. Time taken to process a resource consent. 88% within statutory 97% within statutory Not Achieved – 85% processed within timeframe. timeframe. statutory timeframes in 2019/20. This was (20 working days) (20 working days) due to COVID-19 disruptions along with high consenting numbers and higher proportion of complex consent applications. Time taken to respond to noise complaints. Zone 1 Zone 1 Achieved – Zone 1 (20-30 minutes) – 99.8% (20-30 minutes) – 95% (20-30 minutes) – 99.9% Zone 2 Zone 2 Zone 2 (< 45 minutes) – 98.3% (< 45 minutes) – 90% (< 45 minutes) – 100% Parks user satisfaction. 75% 97% Not Measured – No measurement undertaken during 2019/20.

Customer Experience – Governance and Support Services Baseline Performance Target Achievement Council Outcomes Performance Measure 2018/19 2019/20 2019/20 COUNCIL OBJECTIVE: Quality of customer service. Average score of 87% in 85% Achieved – 89% average score. Putting people at the centre of (contact centre) mystery shopper phone planning and service. calls. (Ensure easy access to Council Quality of customer service. Average score of 94% in 85% Achieved – 86% average score. knowledge and services) (customer service centre) mystery shopper visits.

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Level Two – Today’s Commitments (C) KEY ACTIONS Water & Roads Key action Achievement Water Services KA01 / Implement water security and • On Track KA02 optimisation programme • Commissioning and bringing into service the new trunk watermain between Hastings and Havelock North and construction of the Rollout of stages 1a, 1b and 1c of drinking Havelock North booster pump station. water compliance and investment • Progression of conceptual designs for the Frimley and Eastbourne water treatment plants, reservoirs and pump stations, site programme. selection and commencement of detailed design for construction and completion by the end of 2021. • Haumoana water treatment plant, reservoir and pump station under construction for completion end of September 2020. • Modular water treatment plants designed and under construction for all small community supplies. • Reservoir investigations and upgrades underway at Havelock North, Tauroa and Whirinaki reservoirs. • SCADA, telemetry and data acquisition project underway. • Infrastructure Data (ID) enhancements to automate compliance reporting. KA03 Enhancements to Havelock North • On Track streams. • Further assessment of stream erosion, capacity and flood analysis to inform a strategy for future enhancements. • Commencement of a vegetation removal programme for drainage reserves and adjacent public space areas. KA04 Rollout stormwater quality improvement • On Track programme. • Strategy developed for Lowes Pit stormwater catchment to improve stormwater quality from the industrial catchment and to mitigate any water quality risks associated with the receiving environment. • Onsite flood mitigation and stormwater quality treatment solutions for new development areas (Howard St, Brookvale, Iona). • Further options being developed for the Caroline Rd catchment and discharge to the Ruahapia Stream. KA05 Rollout of wastewater rising main and • On Track trunk main renewal programme. • Renewal project underway on the Park Rd rising main and evaluation of options for the Eastern Interceptor gravity trunkmain replacement. Roads and Footpaths KA06 Strengthen key bridges to allow • On Track – Riggirs, Ohara and partial completion of Moeangiangi bridges strengthening. Two designs and eight evaluations continued heavy vehicle access. completed for HPMV route. KA07 Completion of approved walking and • On Track – Southland Pathway completed, Te Ara Kahikatea Shared Path completed, Napier Rd Cycleway construction cycling projects within the iWay network. underway, trial of sharrows at roundabouts underway. KA08 Implement safety treatments on high risk • On Track – Ongoing safety interventions are being implemented; Speed limit consultation commenced. rural routes and urban intersections.

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Water & Roads Key action Achievement KA09 Completion of road pavement renewal • On Track – Princess Street and St Andrews road completed in the urban area. Middle road and Kahuranaki road completed in programme in both urban and rural areas. the rural area. KA10 Completion of the Whakatu arterial route. • Completed – The Whakatu arterial link route is completed and named Te Ara Kahikatea.

Safe, Healthy & Liveable Communities Key action Achievement KA11 Advance the Hastings Central City Plan. • On Track – Hastings City Centre Revitalisation Plan adopted. Construction of first five initiatives underway. KA12 Advance future cemetery space capacity. • On Track – The undeveloped land at Mangaroa cemetery has been approved by Council to be extended and redeveloped. The funding that was earmarked for the purchase of new cemetery land has been allocated towards this development. No development started yet. KA13 Complete earthquake strengthening on • On Track – Design and engineering work progressed on Town Clock. programme of identified public buildings. KA14 Complete Opera House strengthening • On Track – Toitoi Hawke’s Bay Arts & Events Centre opened in March 2020 then closed due to COVID19 and re-opened in July project. 2020. The Opera House and Functions On Hastings are fully operational and bookings are coming in for the use of both spaces. KA15 Finalise business case for future use and • On Track – Draft Business Case for future use presented to Council in August 2019. Final investment decisions of Council required investment in Municipal Building. in 2020/21. KA16 Enhancements on key reserves (Cornwall, • On Track – Cornwall Park premier playscape completed. Ebbett Park upgrade design complete and construction of carpark, Windsor, and other RMPs). playground and toilet underway. New playgrounds at Hugh Little and Sunderland Drive Parks completed. KA17 Continued rollout of pop-up irrigation • On Track – Pop up irrigation on Frimley Park complete. programme. KA18 Complete planned toilet enhancements • On Track – New toilets completed at Haumoana Domain, Maraetotara Falls, Bill Mathewson and Cornwall Parks. from Sanitary Services Assessment. KA19 Provision of community education • Achieved – Recruitment has been completed following the extensive consultation and feedback of the Joint Waste programmes on waste minimisation. Management and Minimisation Plan with NCC in 2018. Two waste minimisation offices have been employed by the HDC and they are currently assisting with the introduction of new waste/recycling services and development of waste minimisation education programmes/initiatives. KA20 Complete landfill valley development. • On Track – Development work required to maintain available workspace at the landfill was completed. Area D development work will continue each year until 2025 when the area estimated to be full (i.e. no remaining airspace). KA21 Consult on and implement new waste • Achieved – Council consulted on, and adopted, a new joint Waste Management & Minimisation Plan (WMMP). Over 6,000 collection regime. submissions were received by the Hastings District Council and Napier City Council during the consultation period. The plan included new methodologies for kerbside collections for both refuse and recycling. Contracts for this work have been awarded and the new services started on 1 July 2020. The services involve a 120 litre wheelie bin collection service (weekly) for rubbish and a 3 crate (council supplied) system for kerbside recycling collection (weekly).

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Economic & Community Development Key action Achievement KA22 Support industrial land uptake at • On Track – Subdivision of land in Irongate is progressing. The subdivision plan will bring further industrial lots to the market. Irongate, Omahu and Whakatu. Development activity in Irongate ongoing (i.e. Rockit Coolstore and Packhouse). Henderson Road roundabout at Omahu Road works are scheduled to begin in Q1 2021. Irongate Road roundabout works scheduled to begin in the Q3 of the 20/21 financial year.

KA23 Advance Hastings CBD hotel proposal. • On Track – Council Officers are working with potential Hotel developers.

KA24 Progress of various youth futures • On Track – The Youth Employment team have engaged with 191 rangatahi in the last financial year and, of that, 54 have been programmes. placed into work, 5 are job seekers, 18 are into study/training, 43 require further support and 71 have either left the region or are on other pathways. KA25 Implementation of Heretaunga Plains • On Track – A Medium Density Housing Strategy and Implementation Plan was adopted in November 2017 and in March 2018 Urban Development Strategy (HPUDS) Implementation Actions were assigned to Council Groups to action on the following timescales 2018-2021, 2021 + and ‘Ongoing’. sub strategies. Actual implementation has not yet been monitored. Focus has been on implementing the quarterly property market indicator monitoring required by the National Policy Statement on Urban Development Capacity and the first of the three yearly Housing and Business Capacity Assessments. Four quarterly reports were produced over the last year and the Capacity Assessment report is due to be by published by the end of July.

KA26 Development of various place based • On Track – Waipatu place based plan added to the suite of place based plans for various communities, with 3 further plans under plans. development.

KA27 Advance business attraction and job • On Track creation initiatives. • Brochure and meetings with the N.Z. Institute of Skills and Technology (NZIST) interim board proposing Hawke’s Bay as a potential location for 30 salaried positions. • An international Information Technology business offering training for up to 500 people initially in call centre and business support services. • FoodEast is estimated to deliver 500 + jobs and $100m in regional domestic product. • Auckland business is considering Hastings as a location for a food waste processing facility, potential employees 30+ people.

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Finance at a glance

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Annual financial overview

Council has consistently worked to deliver services whilst continuing to look to add best value for money.

Council has, for the first time, reported a rating deficit, with the impacts of COVID-19 Rating surplus being felt across a number of Council activities. High levels of economic activity across the district has also caused Council to incur additional expenditure which has all 2,500,000 contributed to this deficit position. 2,000,000 The rating deficit has been reported in 2019/20 with a $338,590 deficit in Rating Area 1 and a $68,934 surplus in Rating Area 2. The Rating Area 1 deficit will be funded from the 1,500,000 Rating Area 1 General Purpose Reserve while the Rating Area 2 surplus will be set aside in the Rate Area 2 Flood and Emergency Event Reserve. 1,000,000 The rating surplus is the difference between rates collected and spending from those 500,000 rates, including the funding of capital renewal projects and debt repayment. 0

(500,000)

2009/10 2016/17 2008/09 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2017/18 2018/19 2019/2020 Rating Area 1 Rating Area 2

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Rates Debt Council’s Financial Strategy, updated in the 2018-28 LTP, set out that rates will only Core external debt increased this year by $44.5 million to $150.7 million. Council’s increase by the Local Government Cost Index +/- 4%, while acknowledging that external debt continues to increase as it works through the delivery of the capital sometimes events happen that Council needs to react to. programme outlined in the 2018-28 Long Term Plan. Projects including water services The 2020/21 rate increase of 1.9% was reduced to a level lower than had been are contributing to this increase. The 2018-28 Long Term Plan has increases projected projected in Year 2 of the 2018-28 Long Term Plan and was a result of a response from with debt expected to peak at $169 million by 2022. Council to reduce the impact of rate increases following the COVID-19 pandemic lockdown. Rate increases External debt

7.00% 160,000,000

140,000,000 6.00% 120,000,000 5.00% 100,000,000 4.00% 80,000,000 3.00% 60,000,000

2.00% 40,000,000

1.00% 20,000,000

0.00% 0

2009/10 2008/09 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

2019/20 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2020/21 2009/10

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Capital projects Council invested $76.5 million ($69.9 million last year) on capital projects during the year. Capital expenditure

Facilities and Parks

Three Water activities

Roads & Footpaths

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000

2017/18 2018/19 2019/20

Of the capital expenditure incurred in the 2019/20 year, $41 million was spent on replacing existing assets (renewals), $27.9 million on improving the level of service offered to the community, and $7.2 million meeting additional demands being put on the community through growth. The capital expenditure delivered was below that budgeted due to a number of factors including the Level 1 COVID-19 lockdown that restricted the delivery of construction projects for a period of time.

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Key initiatives and projects

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Council’s drinking water strategy, centred on its number one priority of providing safe Community engagement was undertaken on the construction of a new 8,000m3 water drinking water for the Hastings district community, has made a lot of progress over the storage reservoir to be located at the southern end of Frimley Park. To compensate for last year. the land used for this construction, the plan is to move the maintenance sheds out of The Havelock North water crisis highlighted the vulnerabilities in our drinking water the park and return this area near the playground back to parkland. Water storage is an network, and we have responded to the need to future-proof this infrastructure to important part of the overall drinking water strategy that will provide a treated water ensure we always have a sufficient supply of safe water. source in the event of a natural disaster, and also will reduce the need to draw so much water from the aquifer in time of high use such as summer. It’s Council’s single largest source of expenditure, budgeted at $47.5m in 2017 ahead of the 2018/2028 Long Term Plan, a figure that’s subsequently increased to about $60m Similar preparatory work for water storage and treatment is being progressed for the due to variations in the work programme and pricing since that time. Eastbourne water supply. Spread over four years, the 2019/2020 year was the third in the work programme and has included designing and installing new treatment facilities, booster pump stations and planning for reservoir storage, due for completion by 2021. Over the last year, the Havelock North booster pump station that pressurises treated water and pushes it up into the Havelock North hills and reservoirs was built – this will save energy and the cost of pumping the water from the Hastings bores, and also minimise pipe leaks and stress on the network. Upgrades to treatment plants and water storage in the small community water supplies continued with contracts awarded for this work at six community sites. At Haumoana, a new production bore was drilled at Palomino Road to provide a new water source for Haumoana, Te Awanga and Parkhill, and work began on the construction of new treatment facilities. Te Pohue was added to the schedule of small community water supplies to be upgraded.

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Over the last year, a key focus has been on facilitating and enabling the provision of homes for our people, and this has been supported by Central Government investment towards more housing in Hastings. Council has continued to work with a variety of agencies, including Kainga Ora, Te Puni Kokiri and Te Taiwhenua o Heretaunga to progress housing consents. Across the district, sites are being investigated for a mix of social/transitional housing, affordable homes and conventional homes. During the year construction began on the Te Taiwhenua o Heretaunga Waingakau housing project in Flaxmere, an initiative that is a collaborative partnership with Council. Although activity slowed down during the COVID-19 crisis, work has continued on freeing up appropriate land for greenfield residential subdivisions and infill development across the district. To help protect the district’s fertile growing soils, this year saw a variation made to the proposed Hastings District Plan to make it easier to build residential units in the inner city. Another variation to the district plan also occurred to provide for the increasing accommodation needs of seasonal workers in the district, allowing for worker accommodation to be built in the light industrial and general industrial zones at Omahu and Irongate.

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A highlight for the Council this year was the opening of upgraded playgrounds at two of the district’s premier parks – Flaxmere and Cornwall.

Flaxmere playground’s grand opening was held in June last year when the community got its first chance to enjoy the features of the new development, including the highest rope-climbing frame in Hastings, a new slide tower (generously funded by Trust House Community Foundation and First Light Community Foundation), wheelchair accessible merry-go-round, sand play, basket swings, and a mega swing suitable for young adults – making it all-ages friendly. Kimi Ora Community School were also involved with the project, designing and planting the area with 400 native plants ranging from cabbage trees to kōwhai, rewarewa, totara, toetoe, corokia, kawakawa and harakeke. The playground was officially opened just before Christmas, with many children and their The Cornwall Park playground was transformed into a destination playground including families enjoying a carnival day with entertainment, food vendors and face painting. a 10 metre high acorn tower, rope bridges, slides, trampolines and monkey bars. Works to improve the path network in Tainui and Hikanui Reserves were also undertaken A new junior play area was a welcome enhancement and more features were added to this year, making access through the parks safer and more user-friendly for all. the ever-popular splash pad. A toilet block, picnic seating areas, drinking fountain and shade sails were also installed to complete the makeover. Separate mountain biking and walking tracks were introduced or improved and, with the support of care groups, weed removal, tree management and native plantings were

carried out.

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Following public consultation on the Waste Minimisation and Management Plan, a new kerbside recycling and rubbish collection service was rolled out this year. Currently, more than 98,000 tonnes of waste is sent to Omarunui Landfill each year. About a quarter of this comes from kerbside collections and a solid waste survey in 2019 showed that more than 60% of rubbish bin content could instead be composted or recycled. This year’s changes have been introduced to try and address this, promoting more household recycling and reducing the amount of waste sent to landfill. Hastings District Council awarded the recycling contract to Smart Environmental Ltd, and JJ’s Waste & Recycling Ltd was awarded the contract for kerbside rubbish collection. The COVID-19 crisis caused delays to the beginning of the new service but, in the meantime, householders on collection routes were delivered recycling crates and, once COVID-19 restrictions eased, the new 120-litre rubbish wheelie bin deliveries began. The new service started on July 1, 2020. The changes have been accompanied by an educational campaign that will be ongoing to help people become more aware of what and how to recycle, and how to reduce waste overall.

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Almost six years after it was closed for earthquake strengthening, Toitoi – Hawke’s Bay The opening night gala was attended by 700 and included entertainment from a wide Arts and Events Centre opened its doors in February this year. variety of local and national acts in the Opera House, while the community day saw While work continues on strengthening and developing the Municipal Building, the 4,000 visitors treated to local entertainment and tours through the iconic buildings to refurbished Opera House, Cushing Foyer and former Plaza, now renamed Functions on see for themselves the work that has turned these venues into a world-class performing Hastings, were unveiled to the public over two days at a special dawn blessing, opening arts centre. night gala and community festival. A new type of venue for Hastings, it is also a new generation of venue for New Zealand, and will be the hub of the district’s cultural, community and commercial events, intended to give locals and visitors multiple reasons to make Toitoi, and its Opera House, a must-visit attraction. Toitoi has hired nine permanent staff and 32 casual event crew and, after temporarily closing to comply with the restrictions of the COVID-19 lockdown, the venue re-opened in June with a number of acts already lined up over the coming months. Work on the Opera House, Eastbourne, Cushing Foyer and Functions on Hastings cost $17.8m ($13.1m Hastings District Council funding) and in July 2019, the Lottery Grants

Board announced it would contribute $4.75 million towards the Municipal Building project.

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As with the wider Hastings community, the COVID-19 pandemic had a significant impact With the easing of restrictions, attention turned to the reopening of Council facilities, on Council’s operations and planning for the future. resumption of programmes and the work programme that was already underway. The recovery from the economic and community impacts of COVID-19 is now the Council recovery actions have included setting up a rapid response fund to support priority for Council across all its activities and its role to support the wellbeing of all the community organisations, the establishment of an urban centres recovery fund to district’s residents. support the district’s main retail centres in Hastings, Havelock North and Flaxmere and Council kept all essential services operating during the lockdown period and most staff support for recovery funds to assist drought-affected farmers. were able to continue their roles working remotely. Other staff were redeployed to To soften the rate impact while supporting the COVID-19 response and recovery, the support Council incident management services, regional Civil Defence operations and 2020/21 Annual Plan was reviewed and an expected budgeted rates increase was Council welfare services, particularly focused on older people and people living alone. reduced from 4.4% to 1.9%. Council’s economic, social and arts sector recovery plans are well advanced and aim to maximise opportunities for the community. Twenty-eight capital works projects with a value of $16.1m were reactivated from April 2020 to help get business and people moving again.

Council successfully secured $9m of government funding to improve traffic, walking and cycling safety and improvements in rural and urban areas, including Waipatu – this work designed to create further employment for locals. Applications for further shovel-ready project funding from the Provincial Growth Fund were either made or identified. Recovery plans for the district’s more vulnerable residents have also been created and will guide Council’s approach to aiding not only a recovery, but also realising untapped

potential.

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Groups of activities

This section shows how we have performed financially in delivering the work programme for 2019/2020. For reporting purposes we group our activities into the following groups: • Water and Roads • Safe, Healthy and Liveable Communities • Economic and Community Development • Governance and Support Services

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Water and Roads

The section titled ‘Our Reporting Framework’ outlines the detailed achievement for the year for this activity group. Summary information on the key matters within this activity group can also be found within the section titled ‘Key Initiatives and Projects’.

This group of activities primarily contributes to the following community outcomes: Negative effects • healthy drinking water and wise water use Any potential negative effects from the water supply, wastewater disposal and • management of negative impacts on people, air, land and water stormwater disposal activities are mitigated via a programme of environmental monitoring and compliance with consent conditions. No significant breaches of any • a community that wastes less consent conditions occurred during 2019/20, however infringement notices were issued • an environment where people can move around safely in the stormwater and wastewater areas for isolated incidences as outlined in the • an attractive and safe walking and cycling environment ‘Our Reporting Framework’ section of this document. • accessible transport options • efficient movement of goods. Roads • Whilst some of the mandatory performance measures for roads and footpaths were A snapshot of the key aspects of performance for this group of activities during the year either achieved or substantially achieved against target in 2019/20, the Council’s road is as follows: resealing programme was interrupted due to the COVID-19 pandemic. Water and Wastewater Services • Over 80% of the Councils LED streetlight conversion programme is now complete. • 2019/20 represents the fifth year of reporting against mandatory performance • A number of further walking and cycling projects were completed as outlined within measures, with most measures achieved against target. The Council continues to the key actions section of Council’s performance framework titled ‘Our Reporting work on reducing average water consumption, and the continued installation of Framework’. water treatment on our supplies is positioning the Council for full compliance with • The Council’s bridge strengthening project is on track with a number of additional drinking water standards. bridges strengthened in 2019/20. • The provision of safe drinking water is the Council’s number one priority. A variety Negative effects of projects were commenced during the year as detailed in the ‘Key initiatives and Any potential negative effects from transportation activities are mitigated by complying Projects’ section in this document. The Council’s circa $60 million infrastructure with resource consents, adhering to a maintenance programme for the roading network investment response package is on track for completion. and by investing in walking and cycling infrastructure that has less environmental • A significant renewal programme in the wastewater area relating to rising mains impact. The negative effects of road accidents are being mitigated through increased and trunk main infrastructure is also being rolled out. This programme is investment in safety enhancements throughout the district. The Council’s high-risk safety programme has been approved by the New Zealand Transport Agency and approximately 20% complete and is ongoing in future years. physical works are continuing throughout the district. The funding impact statements on the following pages include internal interest but exclude non-cash items such as vested infrastructural assets and depreciation.

48 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

FUNDING IMPACT STATEMENT: LTP Council 2019 LTP Council 2020 Actual Council 2020 Variance Water & Roads Notes $'000 $'000 $'000 $'000 SOURCES OF OPERATING FUNDING General Rates, uniform annual general charge, rates penalties 19,965 20,625 19,396 (1,230)

Targeted Rates 17,335 18,936 18,091 (845)

Subsidies and grants for operating purposes 5,795 5,872 6,019 147

Fees and charges 3,353 3,433 4,976 1,543

Internal charges and overheads recovered 9,560 9,779 10,097 318

Local Authorities fuel tax, fines , infringement fees and other receipts 195 199 567 368

Total operating funding (A) 56,202 58,844 59,146 301 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 23,080 23,550 25,435 (1,885)

Finance costs 4,147 5,317 3,272 2,045

Internal charges and overheads applied 14,271 14,624 14,694 (70)

Other operating funding applications 43 44 94 (50)

Total applications of operating funding (B) 41,541 43,535 43,496 40

Surplus (deficit) of operating funding (A-B) 14,661 15,308 15,650 342 SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure 9,848 8,380 10,123 1,743

Development and financial contributions 6,382 4,305 2,719 (1,586)

Increase (decrease) in debt 34,697 16,826 24,275 7,449

Gross proceeds from sale of assets 38 38 100 62

Lump sum contributions 300 307 81 (227)

Other dedicated capital funding - - - -

Total sources of capital funding (C) 51,266 29,857 37,298 7,441 APPLICATIONS OF CAPITAL FUNDING Capital expenditure

To meet additional demand 10,657 4,336 5,996 (1,661)

To improve the level of service 31,677 19,265 20,746 (1,482)

To replace existing assets 23,593 21,565 26,488 (4,923) Increase (decrease) in reserves - - (283) 283

Increase (decrease) of investments - - - -

Total applications of capital funding (D) 65,926 45,165 52,947 (7,782)

Surplus (deficit) of capital funding (C-D) (14,661) (15,308) (15,650) (341)

Total funding balance (A-B) + (C-D) - - - - Group depreciation and amortisation 25,003 25,096 27,410 (2,314)

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 49

FUNDING IMPACT STATEMENT: LTP Council 2019 LTP Council 2020 Actual Council 2020 Variance $'000 $'000 $'000 $'000 Water Supply Notes SOURCES OF OPERATING FUNDING General Rates, uniform annual general charge, rates penalties 81 83 157 74 Key Financial variances Significant operating variances Targeted Rates 9,413 10,938 10,231 (707) 1. Includes Ministry of Health funding for the Subsidies and grants for operating purposes - - - Bridge Pa Booster (not included in LPT). 303 Fees and charges 1 310 1,663 1,353 Water meter charges (mainly industrial and Internal charges and overheads recovered 4,184 4,276 4,756 481 irrigation) are higher partly due to a price Local Authorities fuel tax, fines, infringement fees and other receipts - - 125 125 adjustment along with increased volume Total operating funding (A) 13,981 15,607 16,932 1,325 drive by dry/drought conditions. APPLICATIONS OF OPERATING FUNDING 2. Payments to staff and suppliers are higher Payments to staff and suppliers 2 7,046 7,226 8,420 (1,194) than LTP due to increased water quality Finance costs 1,334 2,177 1,218 959 monitoring and investigations, maintenance, and the impact of the water charge Internal charges and overheads applied 3,060 3,143 3,491 (348) programme. Other operating funding applications 5 5 86 (81) 3. Development Contributions revenue is less Total applications of operating funding (B) 11,445 12,551 13,216 (665) than LTP due to the timing of Hastings/ Surplus (deficit) of operating funding (A-B) 2,536 3,056 3,716 661 Havelock North development projects. SOURCES OF CAPITAL FUNDING Significant asset acquisitions or replacements Subsidies and grants for capital expenditure - - - - and other variances Development and financial contributions 3 1,755 1,277 612 (665) 4. Debt is higher than LTP due to the increased Increase (decrease) in debt 4 20,086 11,538 13,286 1,749 extent of water supply improvements and Gross proceeds from sale of assets 18 20 42 21 projects in recent years. Lump sum contributions - - 29 29 5. Growth expenditure is greater than LTP due Other dedicated capital funding - - - - to the timing of Omahu Road water supply Total sources of capital funding (C) 21,859 12,835 13,969 1,134 developments including carry-over funding APPLICATIONS OF CAPITAL FUNDING from prior years. Capital expenditure 6. The timing of Frimley and Eastbourne water To meet additional demand 5 300 564 2,071 (1,507) treatment projects differ the LTP assumptions. To improve the level of service 6 22,194 13,622 12,427 1,194 7. Capital Expenditure to replace additional To replace existing assets 7 1,900 1,706 2,206 (500) assets is higher than LTP due mainly to Increase (decrease) in reserves 8 - - 981 (981) timing of Montgomery Place improvements Increase (decrease) of investments - - - - project. Total applications of capital funding (D) 24,394 15,891 17,686 (1,795) 8. Contribution to Reserves due to additional Surplus (deficit) of capital funding (C-D) (2,536) (3,056) (3,717) (661) water meter revenue and interest rate Total funding balance (A-B) + (C-D) - savings. Group depreciation and amortisation 2,507 2,967 2,798 169

50 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

FORECAST STATEMENT OF PLANNED CAPITAL WORKS: LTP 2019/20 Actual Council 2020 Variance $'000 $'000 Water Supply Notes $'000 CAPITAL EXPENDITURE Meet additional demand 564 2,071 (1,507) Improve level of service 13,621 12,427 1,194 To replace existing assets 1,706 2,206 (500) Total capital expenditure 15,891 16,705 (814)

Revised Budget* FORECAST STATEMENT OF MAJOR CAPITAL PROJECTS: 2019/20 Actual Council 2020 Variance

Water Supply Notes $'000 $'000 $'000

Hastings/Havelock North Stage 1 Water 1 11,993 12,900 (908) 1. Timing of a range of water supply Small Supply Upgrades 2 513 4,715 (4,203) enhancements through Hastings/Flaxmere/ Havelock North. Multi-year programme of Other Projects 3 353 1,000 (647) work. Planned Renewals 1 769 59 710 2. Including New Bores, Haumoana Treatment, Whirinaki Pump Station projects. Omahu Industrial Development 4 - 711 (711) 3. Including Montgomery Place project. Havelock Hills – Storage and Pumping projects 5 564 - 564 4. Omahu Stage 1: Includes budget carried forward from previous years. 5. Timing of Havelock Hills subdivision development.

*This does not match the LTP due to a change in project budgets. A comparison with the revised budget has been provided.

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 51

FUNDING IMPACT STATEMENT: LTP Council 2019 LTP Council 2020 Actual Council 2020 Variance $'000 $'000 $'000 $'000 Stormwater Drainage Notes SOURCES OF OPERATING FUNDING General Rates, uniform annual general charge, rates penalties 2,948 2,960 2,575 (385) Key Financial variances Targeted Rates 16 16 16 - Significant operating variances Subsidies and grants for operating purposes - - - - 1. Finance Costs are lower than LTP due to Fees and charges 41 42 75 33 lower interest rates than forecast and the Internal charges and overheads recovered 14 14 14 - timing of capital projects. Local Authorities fuel tax, fines, infringement fees and other receipts - - 42 42 2. Lower external debt requirement due to Total operating funding (A) 3,019 3,032 2,723 (310) the timing of capital projects. APPLICATIONS OF OPERATING FUNDING Significant asset acquisitions or replacements Payments to staff and suppliers 673 692 657 35 and other variances Finance costs 1 689 736 413 323 3. The timing of Howard Street stormwater Internal charges and overheads applied 1,011 1,033 1,120 (87) growth project differs from the LTP. Other operating funding applications 12 12 1 11 4. The timing of Lyndhurst Bulk Services, Total applications of operating funding (B) 2,386 2,474 2,191 282 Railway Road and other projects differ from the LTP. Surplus (deficit) of operating funding (A-B) 634 559 531 (27) 5. The timing of Collection Network renewals SOURCES OF CAPITAL FUNDING differs from the LTP. Subsidies and grants for capital expenditure - - - - 6. Some reserve funding has been utilised for Development and financial contributions 694 694 702 8 stormwater infrastructure projects. Increase (decrease) in debt 2 3,512 1,602 957 (645) Gross proceeds from sale of assets - - - - Lump sum contributions - - - - Other dedicated capital funding - - - - Total sources of capital funding (C) 4,206 2,296 1,659 (637) APPLICATIONS OF CAPITAL FUNDING Capital expenditure To meet additional demand 3 3,039 1,450 563 888 To improve the level of service 4 1,450 953 1,489 (536) To replace existing assets 5 351 451 278 173 Increase (decrease) in reserves 6 - - (140) 140 Increase (decrease) of investments - - - - Total applications of capital funding (D) 4,840 2,854 2,190 664 Surplus (deficit) of capital funding (C-D) (634) (559) (531) 28 Total funding balance (A-B) + (C-D) 1 Group depreciation and amortisation 2,850 2,942 3,758 (816)

52 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

FORECAST STATEMENT OF PLANNED CAPITAL WORKS: LTP 2019/20 Actual Council 2020 Variance Stormwater Disposal Notes $'000 $'000 $'000

CAPITAL EXPENDITURE

Meet additional demand 1,450 563 887

Improve level of service 953 1,489 (536)

To replace existing assets 451 278 173

Total capital expenditure 2,854 2,330 524

Revised Budget* FORECAST STATEMENT OF MAJOR CAPITAL PROJECTS: 2019/20 Actual Council 2020 Variance Stormwater Disposal Notes $'000 $'000 $'000

Howard Street Subdivision Development 1 1,025 154 871 1. Reprioritisation of Lyndhurst, Iona/Middle, Howard Street and Arataki project timings Other Projects 2 605 317 288 across years. Network Modelling 2 174 319 (145) 2. Including stormwater data capture and network modelling projects. Maraekakaho Stormwater - 373 (373) Iona/Middle Roads Subdivision Development 1 308 15 293 Lyndhurst Development Stage II 1 - 298 (298) Arataki Subdivision Development 1 - 184 (184)

*This does not match the LTP due to a change in project budgets. A comparison with the revised budget has been provided.

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 53

FUNDING IMPACT STATEMENT: LTP Council 2019 LTP Council 2020 Actual Council 2020 Variance Sewerage and the treatment and disposal of sewerage Notes $'000 $'000 $'000 $'000 SOURCES OF OPERATING FUNDING General Rates, uniform annual general charge, rates penalties 460 472 389 (83) Key Financial variances Significant operating variances Targeted Rates (other than a targeted rate for water supply) 7,526 7,548 7,417 (131) Subsidies and grants for operating purposes - - - - 1. Industrial Wastewater revenue is higher due to additional connective revenue. Fees and charges 1 1,719 1,762 1,846 84 2. Effluent Disposal Preventative and Reactive Internal charges and overheads recovered 2,583 2,648 2,476 (171) maintenance costs are higher than LTP. Local Authorities fuel tax, fines, infringement fees and other receipts - - 87 87 3. The timing of Trunk Sewers, Lyell Street, Total operating funding (A) 12,289 12,430 12,216 (214) APPLICATIONS OF OPERATING FUNDING Clive Rising Main and Omahu growth projects differ from the LTP. Payments to staff and suppliers 2 2,509 2,561 3,050 (489) Finance costs 3 1,198 1,465 857 607 Significant asset acquisitions or replacements and other variances Internal charges and overheads applied 4,958 5,076 5,107 (32) 4. Lower contributions from private works due Other operating funding applications 15 15 1 13 to timing of development projects. Total applications of operating funding (B) 8,680 9,116 9,016 100 5. The timing of Omahu Lyndhurst, Surplus (deficit) of operating funding (A-B) 3,609 3,314 3,200 (114) Breadalbane and Howard Street growth SOURCES OF CAPITAL FUNDING developments differs from the LTP. Subsidies and grants for capital expenditure - - - - 6. The timing of Lyndhurst Bulk Services Development and financial contributions 1,516 1,255 984 (272) project differs from the LTP. Increase (decrease) in debt 3 7,424 1,233 7,306 6,072 7. The timing of Trunk Sewers, Clive Rising Gross proceeds from sale of assets - - - - Main and Lyell Street Rising Main projects Lump sum contributions 4 244 250 51 (198) differ from the LTP. Other dedicated capital funding - - - - 8. Funding from the Effluent Disposal reserve Total sources of capital funding (C) 9,184 2,739 8,341 5,602 was used to fund wastewater infrastructure projects. APPLICATIONS OF CAPITAL FUNDING Capital expenditure To meet additional demand 5 3,630 - 1,211 (1,211) To improve the level of service 6 175 179 980 (800) To replace existing assets 7 8,988 5,873 9,525 (3,652) Increase (decrease) in reserves 8 - - (175) 175 Increase (decrease) of investments - - - - Total applications of capital funding (D) 12,793 6,053 11,541 (5,489) Surplus (deficit) of capital funding (C-D) (3,609) (3,314) (3,201) 113 Total funding balance (A-B) + (C-D) - - - - Group depreciation and amortisation 6,240 6,395 7,124 (729)

54 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

FORECAST STATEMENT OF PLANNED CAPITAL WORKS: LTP 2019/20 Actual Council 2020 Variance Sewerage and the treatment and disposal of sewerage Notes $'000 $'000 $'000

CAPITAL EXPENDITURE

Meet additional demand - 1,211 (1,211)

Improve level of service 179 980 (801)

To replace existing assets 5,874 9,525 (3,652)

Total capital expenditure 6,053 11,716 (5,664)

Revised Budget* FORECAST STATEMENT OF MAJOR CAPITAL PROJECTS: 2019/20 Actual Council 2020 Variance Sewerage and the treatment and disposal of sewerage Notes $'000 $'000 $'000

Park Road System upgrade 1 2,255 3,037 (782) 1. Park Road rising main was deferred into 2019/20 from previous years. Budget was Trunk Sewers 2 1,076 3,439 (2,362) carried forward. Other Projects 769 871 (102) 2. Trunk sewer project timing differs from the LTP. Rising Mains 3 154 1,304 (1,150) 3. Reprioritisation of various project timings Omahu Industrial Development 3 - 859 (859) across years. Outfall 410 229 181 Wastewater Treatment Plant 205 361 (156) Reactive Renewals 318 116 202 Lyndhurst Development Stage II 3 - 316 (316)

*This does not match the LTP due to a change in project budgets. A comparison with the revised budget has been provided.

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 55

FUNDING IMPACT STATEMENT: LTP Council 2019 LTP Council 2020 Actual Council 2020 Variance Roads and Footpaths Notes $'000 $'000 $'000 $'000 SOURCES OF OPERATING FUNDING General Rates, uniform annual general charge, rates penalties 16,475 17,111 16,274 (836) Key Financial variances Targeted Rates 380 434 428 (6) Significant operating variances Subsidies and grants for operating purposes 1 5,795 5,872 6,019 147 1. Subsidies revenue is higher than LTP due to Fees and charges 2 1,290 1,318 1,391 73 the timing of NZTA subsidies for road Internal charges and overheads recovered 2,779 2,841 2,850 9 maintenance and sealed pavements. Local Authorities fuel tax, fines, infringement fees and other receipts 2 195 199 312 113 2. Fees revenue is higher than LTP due to higher parking and WOF infringements. Total operating funding (A) 26,914 27,775 27,275 (500) APPLICATIONS OF OPERATING FUNDING 3. Payments to staff and suppliers are higher than LTP due to the October 2019 storm Payments to staff and suppliers 3 12,851 13,071 13,309 (237) event, environmental maintenance, Finance costs 926 939 784 156 pavement and drainage maintenance. Internal charges and overheads applied 5,243 5,372 4,975 397 Significant asset acquisitions or replacements and Other operating funding applications 12 12 5 7 other variances Total applications of operating funding (B) 19,031 19,395 19,073 322 4. NZTA subsidies are higher than LTP due to Surplus (deficit) of operating funding (A-B) 7,883 8,380 8,202 (178) the timing of Maintenance and Minor Safety SOURCES OF CAPITAL FUNDING projects. Subsidies and grants for capital expenditure 4 9,848 8,380 10,123 1,743 5. Development contributions are lower than Development and financial contributions 5 2,418 1,078 420 (657) LTP due to the timing of Irongate and Omahu Increase (decrease) in debt 3,674 2,453 2,726 272 growth projects. Gross proceeds from sale of assets 20 18 59 41 6. Capital expenditure includes previously Lump sum contributions 56 57 - (57) deferred projects: Irongate and Lyndhurst, and deferral of Howard Street project. Other dedicated capital funding - - - - 7. Capital expenditure is higher than LTP due to Total sources of capital funding (C) 16,016 11,987 13,328 1.341 “Jobs for Heretaunga” roading projects, and APPLICATIONS OF CAPITAL FUNDING CBD and suburban commercial Capital expenditure developments. To meet additional demand 6 3,688 2,321 2,152 169 8. Capital Works to replace existing assets is To improve the level of service 7 7,858 4,511 5,850 (1,339) higher than LTP due to the timing of the To replace existing assets 8 12,354 13,535 14,478 (943) Kahuranaki Road and Middle/Mutiny Road projects. Increase (decrease) in reserves 9 - - (950) 950 9. Some reserve funding has been utilised for Increase (decrease) of investments - - - roading infrastructure projects. Total applications of capital funding (D) 23,899 20,367 21,530 (1,163) Surplus (deficit) of capital funding (C-D) (7,883) (8,380) (8,202) 179 Total funding balance (A-B) + (C-D) - - - - Group depreciation and amortisation 13,499 13,868 14,006 (138)

56 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

FORECAST STATEMENT OF PLANNED CAPITAL WORKS: LTP 2019/20 Actual Council 2020 Variance Roads and Footpaths Notes $'000 $'000 $'000

CAPITAL EXPENDITURE

Meet additional demand 2,321 2,152 169

Improve level of service 4,511 5,850 (1,339)

To replace existing assets 13,535 14,478 (943)

Total capital expenditure 20,367 22,480 (2.113)

Revised Budget* FORECAST STATEMENT OF MAJOR CAPITAL PROJECTS: 2019/20 Actual Council 2020 Variance Roads and Footpaths Notes $'000 $'000 $'000

Other and Miscellaneous Projects 1 15,918 13,978 1,941 1. Other Projects: including Minor Safety Improvements, Pavement Rehabilitation. CBD and Suburban Developments 818 1,272 (455) 2. Reprioritisation of project timings across Howard Street – Internal 2 1,533 141 1,392 years. Kahuranaki Road 2 - 1,594 (1,594) 3. Jobs for Heretaunga (COVID-19 Government-Funded Initiative). Irongate Industrial Development 2 - 1,376 (1,376) Footpath Renewals 719 165 555 Omahu Industrial Development 2 722 - 722 Princes-Victoria-Ellison 2 - 687 (687) Jobs for Heretaunga 3 - 659 (659) Lyndhurst Development Stage II - 531 (531)

*This does not match the LTP due to a change in project budgets. A comparison with the revised budget has been provided.

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 57

Safe, Healthy and Liveable Communities

The section titled ‘Our Reporting Framework’ outlines the detailed achievement for the year for this activity group. Summary information on the key matters within this activity group can also be found within the section titled ‘Key Initiatives and Projects’.

In summary this group of activities primarily contributes to the following community A snapshot of the key aspects of performance for this group of activities during the year outcomes: is as follows: • best use of productive land • This activity group contains a broad range of services and facilities. The majority • managing negative effects on people, air, land and water (77%) of the levels of service for this group of activities were achieved or substantially achieved. A number of activities key performance targets were • a community that wastes less impacted by the COVID-19 pandemic during 2019/20. • energy efficiency • A new system of kerbside recycling and rubbish collection was rolled out during • an attractive location to live the year. • diversity in housing choice • The Splash Planet facility exceeded its visitor number target for the year. • attractive and usable public spaces • Earthquake strengthening of the Municipal Building made further progress • safe, multi-functional urban centres during the year. • safe neighbourhoods for people • Upgraded playgrounds were completed at two of the districts premier parks in • connected open space Flaxmere and Cornwall Park. • urban areas resilient to hazards and shocks Negative effects The only significant negative effect identified for this group of activities is the potential • places and space for learning and interaction discharge of contaminants from the landfill. The Council mitigates these potential • places and space for recreation and fun adverse effects through adherence with resource consent conditions. No significant • a strong district identity breaches were recorded in 2019/20. The Council is also accredited under the • putting people at the centre of planning and service ISO9000:2001 standard which is adhered to.

• effective working relationships with mana whenua • assisting our people to succeed.

58 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

FUNDING IMPACT STATEMENT: LTP Council 2019 LTP Council 2020 Actual Council 2020 Variance Safe, Healthy and Liveable Communities Notes $'000 $'000 $'000 $'000 SOURCES OF OPERATING FUNDING Key Financial variances

General Rates, uniform annual general charge, rates penalties 30,260 31,060 32,546 1,486 Significant operating variances 1. Kerbside collection targeted rates. Targeted Rates 1 1,706 1,807 1,670 (137) 2. Fees and Charges are higher than LTP due Subsidies and grants for operating purposes 93 105 71 (35) to: Building Consent volumes and Solid Fees and charges 2 19,032 20,321 21,746 1,425 Waste volumes (Transfer Stations and Internal charges and overheads recovered 3 26,522 27,177 13,828 (13,349) Landfill). COVID-19 has limited volumes Local Authorities fuel tax, fines, infringement fees and other receipts 89 91 180 89 since March. Total operating funding (A) 77,702 80,561 70,041 (10,520) 3. Internal recoveries are less than the planned APPLICATIONS OF OPERATING FUNDING LTP due to the outsourcing of Council’s Parks Works Division which occurred after Payments to staff and suppliers 4 35,961 36,921 41,835 (4,914) the LTP was set. Finance costs 1,400 1,663 1,215 448 4. Payments to suppliers are high due to: Internal charges and overheads applied 29,608 30,453 18,499 11,954 Kerbside Collection implementation, high Other operating funding applications 5 2,583 2,138 4,158 (2,020) Landfill and Building Control volumes, and Total applications of operating funding (B) 69,553 71,175 65,706 5,469 higher costs across some other activities. Surplus (deficit) of operating funding (A-B) 8,149 9,386 4,335 (5,051) 5. Higher Landfill Emission Trading Scheme (ETS) costs, timing of capital grants to SOURCES OF CAPITAL FUNDING Regional Sports Park and the grant for Subsidies and grants for capital expenditure 6 916 1,134 5,123 3,989 Te Mata Park land purchase. Development and financial contributions 800 800 911 112 Significant asset acquisitions or replacements Increase (decrease) in debt 7 8,062 10,845 6,225 (4,620) and other variances Gross proceeds from sale of assets 8 292 240 640 401 6. Capital funding is higher than LTP due to the Lump sum contributions - - - - Municipal Building strengthening grants. Other dedicated capital funding - - - - 7. Debt has increased by less than planned due Total sources of capital funding (C) 10,069 13,018 12,900 (118) to deferral of the Landfill extension and APPLICATIONS OF CAPITAL FUNDING lower debt requirement for Toitoi. Capital expenditure 8. Asset sale proceeds are high partly due to deposits received from the land sale of To meet additional demand 9 235 373 1,240 (867) Orchard Road parks depot along with the To improve the level of service 10 6,593 9,458 7,349 2,109 sale of plant and equipment. To replace existing assets 11 11,391 12,573 13,667 (1,094) 9. Capital costs are high due to the timing of Increase (decrease) in reserves 12 - - (5,022) 5,022 Lyndhurst and Northwood Reserves projects. Increase (decrease) of investments - - - Total applications of capital funding (D) 18,219 22,404 17,235 5,169 10. Capital costs are low due to deferring development of Landfill Valley B (due to Surplus (deficit) of capital funding (C-D) (8,149) (9,386) (4,335) 5,051 extension of Valley D). Total funding balance (A-B) + (C-D) - - - 11. Capital costs are high due to Toitoi Opera Group depreciation and amortisation 5,432 5,119 6,221 (1,102) House and Municipal Building strengthening. 12. Reserve funding has been utilised for development of Toitoi.

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 59

FORECAST STATEMENT OF PLANNED CAPITAL WORKS: LTP 2019/20 Actual Council 2020 Variance Safe Healthy and Liveable Communities Notes $'000 $'000 $'000 CAPITAL EXPENDITURE Meet additional demand 373 1,240 (867) Improve level of service 9,458 7,349 2,109 To replace existing assets 12,573 13,667 (1,094) Total capital expenditure 22,404 22,256 148

Revised Budget* FORECAST STATEMENT OF MAJOR CAPITAL PROJECTS: 2019/20 Actual Council 2020 Variance Safe Healthy and Liveable Communities Notes $'000 $'000 $'000 MAJOR PROJECTS 1. Toitoi – Opera House and Municipal Building Toitoi – Municipal Building 1 5,110 4,886 224 strengthening is being completed using national funding granted since 2018/19 LTP General 2 3,708 2,762 945 was set. Landfill New Valley Development 3 2,984 1,264 1,720 2. The purchase of Plant & Mahinery, Toitoi – Opera House 1 1,840 1,219 621 Computers & Equipment, Furniture & Toitoi – Plaza 1 - 2,177 (2,177) Fittings. 3. Extension of Landfill Valley C has deferred Cornwall Park Premier Playground 4 307 1,592 (1,286) new development of Valley D. Kerbside Recycling 5 - 1,025 (1,025) 4. Cornwall Park Premier Playground carried Hastings Art Gallery 6 - 721 (721) over into 2019/20 year with construction underway. 5. Kerbside Recycling new contract and purchase of recycling crates. 6. Art Gallery roof replacement using budget carried over from prior years.

*This does not match the LTP due to a change in project budgets. A comparison with the revised budget has been provided.

60 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

Economic and Community Development

The section titled ‘Our Reporting Framework’ outlines the detailed achievement for the year for this activity group. Summary information on the key matters within this activity group can also be found within the section titled ‘Key Initiatives and Projects’.

This group of activities primarily contributes to the following community outcomes: A snapshot of the key aspects of performance for this group of activities during the year • an enhanced traditional economic base is as follows: • new and diversified business investment • Subdivision of land in Irongate is progressing. The subdivision plan will bring further • an appealing visitor destination industrial lots to the market. Development activity in Irongate ongoing (i.e. Rockit Coolstore and Packhouse). • skilled and enterprising people • Key performance metrics in respect of residential land supply and serviced • an attractive location to live industrial land availability are on track. • diversity in housing choice • Economic development activity was focused particularly on business attraction • attractive and useable public spaces through a range of initiatives during the year. Foodeast (a new food innovation hub) • safe, multi-functional urban centres and neighbourhoods is in the implementation phase and is estimated to deliver 500 + jobs and $100m in regional domestic product. • a strong district identity • A range of social programmes with particular focus on helping young people into • putting people at the centre of planning and service jobs continued during the year. • effective working relationships with mana whenua • In terms of tourism and visitor attraction, Splash Planet exceeded its visitor number • young people connect and develop positively within the community target for the year with a total of 116,494 visitors. Council’s i-Sites, collectively, • appropriate services and facilities for an ageing population. received 46,416 visitors. Negative effects Negative effects can result in the form of environmental issues associated with increased development. The recent Council adoption of a new Infrastructure Code of Practice developed on sustainability principles and best practice sets out infrastructure guidelines for new developments.

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FUNDING IMPACT STATEMENT: LTP Council 2019 LTP Council 2020 Actual Council 2020 Variance Economic and Community Development Notes $'000 $'000 $'000 $'000 SOURCES OF OPERATING FUNDING General Rates, uniform annual general charge, rates penalties 6,380 6,832 8,104 1,272 Key Financial variances Targeted Rates 341 341 342 1 Significant operating variances Subsidies and grants for operating purposes 1 50 51 525 474 1. Grant revenue is higher than LTP due to Fees and charges 443 452 448 (3) Government funding for Karamu Internal charges and overheads recovered 25 26 100 74 Masterplan and He Poutama Rangatahi Youth employment funding. Local Authorities fuel tax, fines, infringement fees and other receipts - - 1 1 2. Staff and suppliers are high due to the Total operating funding (A) 7,239 7,702 9,521 1,819 COVID-19 response and communication APPLICATIONS OF OPERATING FUNDING costs now represented here (LTP: in Payments to staff and suppliers 2 4,958 5,207 6,171 (964) Governance & Support). Finance costs 19 19 11 7 3. Lower “Great Things Grow Here” project Internal charges and overheads applied 1,401 1,447 1,611 (164) costs and lower financial incentives than Other operating funding applications 3 1,053 1,031 860 171 planned. Total applications of operating funding (B) 7,431 7,704 8,654 (950) Significant asset acquisitions or replacements Surplus (deficit) of operating funding (A-B) (192) (2) 866 868 and other variances SOURCES OF CAPITAL FUNDING 4. The external debt requirement has been Subsidies and grants for capital expenditure - - - - low due to project timings. Development and financial contributions - - - - 5. An operating surplus has contributed to Increase (decrease) in debt 4 237 116 (13) (129) reserves. Gross proceeds from sale of assets 20 54 42 (12) Lump sum contributions - - - - Other dedicated capital funding - - - - Total sources of capital funding (C) 257 171 29 (141) APPLICATIONS OF CAPITAL FUNDING Capital expenditure To meet additional demand - - - - To improve the level of service - - 15 (15) To replace existing assets 65 169 97 72 Increase (decrease) in reserves 5 - - 784 (784) Increase (decrease) of investments - - - - Total applications of capital funding (D) 65 169 895 (726) Surplus (deficit) of capital funding (C-D) 192 2 (866) (868) Total funding balance (A-B) + (C-D) - - - - Group depreciation and amortisation 63 51 65 (14)

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FORECAST STATEMENT OF PLANNED CAPITAL WORKS: LTP 2019/20 Actual Council 2020 Variance Economic and Community Development Notes $'000 $'000 $'000 CAPITAL EXPENDITURE Meet additional demand - - - Improve level of service - 15 (15) To replace existing assets 169 97 72 Total capital expenditure 169 112 57

Revised Budget* FORECAST STATEMENT OF MAJOR CAPITAL PROJECTS: 2019/20 Actual Council 2020 Variance Economic and Community Development Notes $'000 $'000 $'000 Plant Machinery and Vehicles Renewals - 97 (97)

*This does not match the LTP due to a change in project budgets. A comparison with the revised budget has been provided.

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Governance and Support Services

The section titled ‘Our Reporting Framework’ outlines the detailed achievement for the year for this activity group. Summary information on the key matters within this activity group can also be found within the section titled ‘Key Initiatives and Projects’.

This group of activities primarily contributes to the following community outcomes: • putting people at the centre of planning and service • effective working relationships with mana whenua • a future we can fund. A snapshot of the key aspects of performance for this group of activities during the year is as follows: • Customer feedback for both the Customer Service Centre and Contact Centre is very positive with the continuation of high customer satisfaction, as measured through mystery shopper visits and phone calls. • The Council’s targets for website usage were exceeded with an average of 21,052 unique visitors per month, well in excess of the target of 15,000. Service levels within the customer service and contact centre areas of Council were achieved. • No breaches of statutory planning processes were recorded during the year. • The section titled ‘Exercising Partnership – Council, Tangata Whenua, Mana Whenua’ outlines the activities undertaken during 2019/20 to establish and maintain processes to provide opportunities for mana whenua to exercise partnership in decision making.

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FUNDING IMPACT STATEMENT: LTP Council 2019 LTP Council 2020 Actual Council 2020 Variance Governance and Support Notes $'000 $'000 $'000 $'000 SOURCES OF OPERATING FUNDING General Rates, uniform annual general charge, rates penalties 3,242 3,294 1,666 (1,628) Key Financial variances Targeted Rates (1,840) (925) - 925 Significant operating variances Subsidies and grants for operating purposes - - 1. Fees & Charges income from IT, Election Fees and charges 1 97 140 726 586 and Procurement support provided to Internal charges and overheads recovered 2 14,471 14,976 15,047 71 other Councils. Local Authorities fuel tax, fines , infringement fees and other receipts 646 660 694 34 2. Government & Support operating costs are recovered by internal charge across Council. Total Operating Funding (A) 16,616 18,145 18,134 (11) APPLICATIONS OF OPERATING FUNDING 3. Communications costs are now charged to Marketing (instead of Governance & Payments to staff and suppliers 3 12,389 12,804 12,574 230 Support). Finance costs 4 55 56 648 (592) 4. Costs associated with interest rate hedging. Internal charges and overheads applied 4,242 4,374 4,019 355 5. Funding costs are higher than planned due Other operating funding applications 5 1,120 1,144 2,084 (940) to Drought Relief grants provided. Total applications of operating funding (B) 17,806 18,378 19,324 (946) 6. Timing of Development Contributions Surplus (deficit) of operating funding (A-B) (1,191) (233) (1,190) (957) received from Irongate growth projects. SOURCES OF CAPITAL FUNDING Significant asset acquisitions or replacements Subsidies and grants for capital expenditure - - - - and other variances Development and financial contributions 6 - - 571 571 7. Borrower notes related to higher LGGA Increase (decrease) in debt 1,396 612 706 94 debt levels. Gross proceeds from sale of assets 69 76 3 (73) 8. Higher debt requires additional investment Lump sum contributions - - - - in LGFA. Other dedicated capital funding - - - - Total sources of capital funding (C) 1,465 688 1,280 592 APPLICATIONS OF CAPITAL FUNDING Capital expenditure To meet additional demand - - - - To improve the level of service - - - - To replace existing assets 1,277 572 943 (371) Increase (decrease) in reserves 7 (2,000) (500) (821) 321 Increase (decrease) of investments 8 997 383 (33) 415 Total applications of capital funding (D) 274 455 89 366 Surplus (deficit) of capital funding (C-D) 1,191 233 1,191 957 Total funding balance (A-B) + (C-D) - - - - Group depreciation and amortisation 747 886 972 (86)

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FORECAST STATEMENT OF PLANNED CAPITAL WORKS: LTP 2019/20 Actual Council 2020 Variance Governance and Support Services Notes $'000 $'000 $'000 CAPITAL EXPENDITURE Meet additional demand - - - Improve level of service - - - To replace existing assets 572 943 (371) Total capital expenditure 572 943 (371)

Revised Budget* FORECAST STATEMENT OF MAJOR CAPITAL PROJECTS: 2019/20 Actual Council 2020 Variance Governance and Support Services Notes $'000 $'000 $'000 Laptop Replacements 1 49 172 (123) 1. Increased transition from PC to Laptop due PC/Laptop Replacements 1 162 56 106 to COVID-19 lockdown. PABX Upgrade 2 - 152 (152) 2. Timing of PABX and GIS projects differ from that planned in LTP. Plant Machinery & Vehicles Renewals 102 22 81 GIS Orthophotography 2 - 121 (121) *This does not match the LTP due to a change in project budgets. A comparison with the revised budget has been provided.

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Exercising partnership – Council, Tangata Whenua, Mana Whenua

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Exercising partnership – Council, Tangata Whenua, Mana Whenua

Hastings District Council remains steadfast in its commitment to nurturing and strengthening processes to enable tangata whenua and mana whenua to exercise partnership in decision making across a range of contexts here at Council and in the wider Hastings district.

Titiro ake au ki te hāro o te kāhu tui, tui, tui, tuia. Tuia te rangi e tū nei, tuia te papa e Like the preceding year, the 2019/2020 year has been a significant year of continued takoto nei. Tuia te here tangata o Heretaunga takoto noa, ka rongo te pō, ka rongo te growth and learning for the Hastings District Council with respect to exercising ao. Tuia te muka tangata i takea mai i Hawaiki-nui, Hawaiki-roa, Hawaiki-pāmaomao. Te partnership and engaging relationships with tangata whenua and mana whenua across hono i wairua ki te whai-ao ki te ao mārama, tihei Heretaunga! the district. As we began the year, we were in the latter stages of a long process Kei ngā mana, kei ngā reo, kei ngā pari kārangaranga o tēnā pito, o tēnā marae, o tēnā regarding one of our most significant learnings for Council concerning engagement and hapū o te rohe whānui o Heretaunga, anei ngā kupu whakamiha ki a koutou katoa. partnership relationships with tangata whenua and mana whenua in recent years – the Craggy Range track. As highlighted last year and through the benefit of hindsight, the E tika ana kia tukuna atu ngā whakaaro ki a rātau mā ko ngā rau-o-piopio kua purea atu track resource consent issued by Council in August 2017 failed to exercise partnership. e ngā hau maiangi, e ngā hau pūkerikeri ki tua o te ārai. Kāti, rātau te tira mātai pō ki a Having exhausted a thorough process across two years since the track was revealed for rātau, waiho ake ko tātau te tira mātai ao ki a tātau. all to see including numerous hui-ā-hapū, marae hui, reference group hui, consultation Tēnā rā tātau katoa kei te hapori whānui o Heretaunga e whakamana nei i tō tātau reo and engagement across a number of contexts including cultural, statutory, landscaping, rangatira i raro i te āhua o ngā kupu kōrero ā kui mā, ā koro mā me ngā tāhuhu kōrero o ecological, agricultural, archaeological, slopes, soils, hydrology, geological, and te rohe whānui o Heretaunga; tō tēnā hapū, tō tēnā hapū, tō tēnā hapū. recreation. On 29 November 2019, a blessing was held on site to complete the Kei ngā marae rua tekau mā whā o Te Kaunihera ā-Rohe o Heretaunga, kei ngā hapū restoration and remediation of what was the Craggy Range track; a journey that took kārangaranga, kei ngā Taiwhenua o te takiwā nei, kei ngā Rōpū Tiriti o Waitangi, nei anō two years to complete from the tracks initial unveiling to its eventual remediation, te maioha ki a koutou, ā nō mātau hoki te whakamīharo ki te tukua nei ngā mihi ki a which is closely monitored by Council as part of its resource consent to remediate the koutou otirā, ki a tātau katoa. track. Nonetheless, these learnings have been huge for Council including governors and staff, where a Council decision made in 2017 about the outstanding natural landscape Heoi anō, Heretaunga-ara-rau, Heretaunga-haukū-nui, Heretaunga-hāro-o-te-kāhu, commonly known as Te Mata Peak but by a range of names to tangata whenua and Heretaunga-raorao-haumako, Heretaunga-ringahora, Heretaunga takoto noa; tihei mana whenua that include, Te Matā, Te Mata, Te Mata o Rongokako, and Te Heretaunga! Karanemanema o Te Mata o Rongokako, has poignantly but justly so, provided the learning curve for Council.

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During 2019/2020, Hastings District Council facilitated a range of opportunities for There is also the added cost of time and commitment of having more members on tangata whenua and mana whenua and/or partnered up with tangata whenua and multiple committees and or with more commitments, which at times has shown to mana whenua entities to continue to grow and exercise partnership in decision making compromise attendance and consistent participation. This was monumental for with our statutory partners. The following narrative, while not a complete record, Council and for the wider Māori community across the Hastings district and, provides further key highlights across the 2019/2020 year: contrary to the varying views, provides another mechanism for increased Māori • The roles of Pou Ahurea – Principal Advisor/Advisor: Relationships, Responsiveness representation in the exercise of partnership between Council, mana whenua and and Heritage, have continued to engage with multiple layers and contexts across tangata whenua. The committee’s tangata whenua membership is made up of our wide and diverse community. Relationship building with mana whenua and Robin Hape (Chair), Ngaio Tiuka, Tania Eden, Te Rangihau Gilbert, Mike Paku and community to enhance strategic relationships between whānau, marae, hapū, Marei Apatu. The committee’s terms of reference include: Taiwhenua, Post Settlement Governance Entities (PSGEs) including Ngāti • To provide governance-level advice to the Council on matters of strategy and Pāhauwera Development Trust, Maungaharuru Tangitū Trust, Hineuru Iwi Trust, policy development across the scope of Council’s activities; Mana Ahuriri Trust, Heretaunga Tamatea Settlement Trust, and Ngāti Kahungunu • To support the implementation and monitoring of Te Kura Nui, the policy Iwi Incorporated alongside Te Taiwhenua o Heretaunga and Te Taiwhenua o Te framework and work programme at Council, called the Māori Relationships Whanganui-a-Orotū, and the Council is ongoing. Framework; • The Hastings District Council Heretaunga Takoto Noa Māori Standing Committee • To provide input and advice into the Long Term Plan and the Annual Plan in maintains its focus on strategic priorities for tangata whenua in the district. The order to assist Council to effectively consider Māori perspectives and address committee comprises six tangata whenua appointments and six councillors. issues of importance to mana whenua and tangata whenua; and Following the 2019 triennial elections, six (6) tangata whenua appointments were • To assist the Council as appropriate in conducting and maintaining effective, selected from expressions of interest and nominations across our iwi rūnanga – good faith working relationships with mana whenua and tangata whenua, Ngāti Kahungunu Iwi Incorporated, our Taiwhenua – Te Taiwhenua o Te including advice on governance arrangements. Whanganui-a-Orotū and Te Taiwhenua o Heretaunga, our Tiriti o Waitangi Post- Settlement Governance Entities (PSGEs) – Heretaunga-Tamatea Settlement Trust, • Council continues with its aspirations and intent to nurture and provide Mana Ahuriri Trust, Maungaharuru Tangitū Trust, Hineuru Iwi Trust, Ngāti opportunities for PSGEs within the Hastings district, to be engaged in district Pāhauwera Development Trust, and from Mātaawaka residing in the Hastings planning, economic development, social growth, cultural initiatives and district represented under the, Takitimu District Māori Council. This is a environmental wellbeing, to benefit tangata whenua and the community as a representation-based model that has the advantage of building on the previous whole. As highlighted earlier, the PSGEs that fall within the Hastings District model of six (6) tangata whenua members and what it offers the committee with Council’s territorial land authority are – Heretaunga Tamatea Settlement Trust, regard to adequate and appropriate representation of mana whenua, tangata Mana Ahuriri Trust, Maungaharuru Tangitū Trust, Hineuru Iwi Trust, Ngāti whenua and mātaawaka. Having six (6) tangata whenua members and six (6) Pāhauwera Development Trust and Ngāti Kahungunu Iwi Incorporated. Councillors to make a committee of 12 will eliminate the inefficiency and, at times, ineffectiveness of larger committee numbers due to the strain on time, commitment and resource associated with larger committees.

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• Housing remains a priority for Council across the district and Council continues to The original process for measuring improvement included a self-assessment encourage the development of Papakāinga housing through effective cross-sectoral procedure, followed by an agreed action plan for implementation and then engagement with whānau and hapū, Te Puni Kōkiri, the Māori Land Court, and project monitoring and reporting progress, all of which has been developed in conjunction consultants. As other organisations including Te Taiwhenua o Heretaunga and the with Heretaunga Ararau Te Reo Māori Action Plan. With Te Kura Nui being the PSGEs ramp up their own aspirations around housing for Māori, Council are also at backdrop for the organisation’s cultural competency improvement, the action plan various stages of engagement in supporting our respective statutory partners’ designed by the Pou Ahurea team will sit across all group services. When te reo aspirations, strategies and/or visions moving forward. The Waingākau housing Māori outcomes are implemented and improved across an organisation such as the development in West Flaxmere exemplifies the role that Council can play and support Hastings District Council, the intrinsic values of a culture are achieved. Underlying its partners like Te Taiwhenua o Heretaunga. Council shares Te Taiwhenua o this action plan is a level of consistency with other major cities across Aotearoa Heretaunga’s aim of working hard for the betterment of the community, so was New Zealand, and that is a key goal of the action plan, to be a te reo Māori city at a proud to support and work alongside the organisation on some of their initiatives this time in the not too distant future. year. Waingākau Village, for example, was a unique development that Council was • Council is encouraging and supporting the aspirations of our Māori communities proud to be a partner in, potentially the first of more such partnerships. within the district to aspire to the development of their respective hapū plans, • The Tangata Whenua Wastewater Committee continues to provide sound including community plans. In partnership with tangata whenua, Council launched governance to Council through the development of wastewater solutions the Waipatu Community Plan, which was a big player in Council securing Provincial integrating tikanga Māori (customary values) alongside the provisions of the Growth Fund (PGF) funding to have State Highway 51 upgraded including road Resource Management Act. Accordingly, the biological trickling filter system for the safety improvements, speed restrictions, new footpaths, the moving of all overhead wastewater treatment plant at East Clive has a consent to operate (granted by the cables underground, and the installation of safety barriers. Moving forward, with Hawke’s Bay Regional Council) for a period of 35 years. A condition of the consent is our Māori communities growing in capacity and capability day by day, we anticipate that the Committee meets once a year to monitor the performance of the more community plans to evolve alongside Whakatū, Waipatu, Flaxmere, Cape treatment plant. Marei Apatu and Beverley Te Huia were nominated onto this Coast and Flaxmere West with other kāinga such as Bridge Pā, Te Pōhue, Ōmāhu, committee mid-way through 2019 as new members, replacing former tangata and Pakipaki coming into the fold too. whenua committee members. • This last year has also seen the adoption by Council of Heretaunga Ararau, the • The refreshed Te Kura Nui – Māori Relationships Framework and its Hastings District Council Te Reo Māori Policy and the development of the implementation will allow officers, Council and the Heretaunga Takoto Noa Māori Heretaunga Ararau Te Reo Māori Action Plan to support the place and use of te reo Standing Committee to monitor the organisation’s cultural responsiveness to Māori across the whole Council and its facilities. The Heretaunga Ararau Te Reo Māori; to mana whenua, to tangata whenua. The key focus moving forward will be Māori Policy was launched during Te wiki o te reo Māori 2019, which also saw the continuous journey towards Council’s goal for all staff to grow their cultural Council celebrate a number of initiatives to champion te reo Māori; both during the responsiveness to kaupapa Māori (Māori position and or viewpoint on issues week, and ongoing throughout the year. Aligned with this work is the direction concerning Māori) and to ‘te ao Māori’, a Māori worldview. Te Kura Nui has four from Council’s Lead Team for staff to have cultural indicators included in key areas: performance objectives. Māori Language Planning elements included in the • Governance and relationships; Heretaunga Ararau Te Reo Māori Action Plan and are: • Culture and Identity; • Te Mārama Pū/Critical Awareness – When people accept the need for language revitalisation and understand the ambitious role that Council has in achieving • Prosperity and Wellbeing; and, the goal to be a te reo city in the not too distant future. • Resources and Infrastructure.

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• Mana/Status – When people understand the value of te reo Māori and accept The focus on providing leadership in reducing risk, being ready for, responding to it as an integral part of our city and national identity. and recovering from emergencies, as well as safety in the Hastings district including • Te Whakamahi/Use – People can speak, listen to, read, write and comprehend holistic wellbeing (cultural, physical, social), reinforces the notion of partnership te reo Māori at a level that supports their use and have access to reo-rich across a number of tiers including our tangata whenua partners. Regarding environments and domains. aspirations of Council and tangata whenua working collaboratively across all manner of things in our district, a decision was made to ‘adorn’ the main entrance • Ako/Acquisition – Council supports people to have increased opportunities to with appropriate whakairo (carvings) to represent ‘te ao Māori’ (the Māori world) acquire te reo Māori at a level that supports their use. and local cultural narratives. For this reason, local master carver, Takaputai (Taka) • Te Puna/Corpus – Quality new words, terms and standards are developed and Walker (QSM), provided his scope and expertise on the concept of the whakairo available to support the use of te reo Māori. and was contracted to undertake and complete the whakairo for the building. The • The Hastings District Council had the privilege of partnering up and working benefits of the whakairo adorning the main doorway and entrance to the new alongside IwiToi Kahungunu and Dr Sandy Adsett to develop and create a cultural building are numerous and include: – aesthetic benefits, cultural significance and celebration in art. What manifest was a successful and inaugural ‘Main Street relevance benefits, social benefits, Treaty of Waitangi partnership benefits, and Heretaunga Toi/Art Week’ initiative held over six weeks in July and August. This was overall holistic benefits that centre on cultural safety, good public [partnership] an initiative that enabled local contexts, multicultural contexts and notions of relations where the whakairo link the building, its purpose and function to the ‘place’ to be celebrated through the visual arts in collaboration and partnership place-based landscape and history of Heretaunga and the wider region. The with our district’s schools. The ‘Main Street Heretaunga Toi/Art Week’ initiative building was blessed and then officially opened in September by the Minister of built on the notion of community connectedness that involved Hastings city’s CDEM, the Honourable Peeni Henare. primary schools, our CBD retailers on Heretaunga Street, the Hastings City Business • The second half of the year has seen the Council forge a greater connection with its Association, Iwi Toi Kahungunu, and the Hastings District Council. The value of statutory partners as we as a community as a whole have had to work ‘Main Street Heretaunga Toi/Art Week’ was significant for its positive impact on our collaboratively to undertake the appropriate response and recovery to COVID-19, city and community; bringing the whole community together via schools and our which remains ongoing. History has shown that the unskilled and least paid are the learners, the visual arts and cultural narratives through a specific theme titled – most vulnerable to job losses and community dislocation and without a doubt, Cultural Legends of our Ancestors, that enabled and nurtured relationships with Māori are disproportionately represented amongst Whānau Pounamu (at risk each other, showcased the talents and knowledge of our schools and our diverse families). If COVID-19 looks to repeat history, the impact on Māori will be severely learner population, while also bringing to prominence, our diverse narratives and felt now and into the future by the currently young and large Māori population. histories. Accordingly, if our actions that form the basis of Council’s response and recovery to • The significance of the new Emergency Management Operations building in COVID-19 fail to take cognisance of our community social networks, our community Hastings given its role in terms of housing staff from both the Hastings District facilities, and/or our diverse local cultural capital), Whānau Pounamu will be Council and the Ministry of Civil Defence and Emergency Management plays a disproportionately impacted. significant role for the wellbeing and safety of the wider district. The COVID-19 response for instance, in the region from 25 March through to 27 April (Level 4) and then through to 13 May (Level 3) was all conducted out of this building by Civil Defence and Emergency Management (CDEM), and the National Emergency Management Agency with support from the Hastings District Council.

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Ngāti Kahungunu Iwi Incorporated were quick to move in March with the onset of • As COVID-19 hit our shores and country in March, around $600 million of PGF the Level 4 lockdown and, with its partners including Council, established the Tihei money was targeted in the last quarter of the year to support regional economies Mauri Ora Centre/Hub. Across the Ngāti Kahungunu region that encompasses the to recover from COVID-19. The funding was repurposed Provincial Growth Fund Hastings District, and under the Tihei Mauri Ora Centre mantle, the Heretaunga and money and unallocated funding from the Regional Investment Opportunities Te Whanganui-a-Orotū Taiwhenua had food hubs set up alongside ‘Community Contingency. Of the range of new projects to be funded was an allocation by Champions’ that responded to food requests across the district. Community Government of up to $70 million for upgrades of marae across the country. Council champions were the key link between these community hubs and Whānau collaborated with Te Puni Kōkiri to support Te Taiwhenua o Heretaunga and Te Pounamu. Thousands of food/hauora (care) packages were provided for Whānau Taiwhenua o Te Whanganui-a-Orotū to submit a joint application for Marae Pounamu through these hubs on top of all of the other good will taking place across Renovation under the PGF for 20 marae across the Hastings district. At the time of the district. Community Champions were established and networks set up under this report going to publication, our collaborative application titled Te Tū Marae ki each Taiwhenua who connected with and checked in on Whānau Pounamu. There Te Matau-a-Māui was still awaiting the outcome of our application to the were Māori, Pasifika and Migrant Community champions out across the district government. working tirelessly and side by side to ensure that no one was missed or left behind; While these opportunities have presented themselves for the likes of Council, including Māori, Pasifika, Pākehā and all ethnic minorities. marae, organisations and community to seek COVID-19 related funding, for Māori Hasting District Council continued to work alongside Ngāti Kahungunu Iwi and our marae communities here across Heretaunga, it is critical that we respond Incorporated and the Tihei Mauri Ora Centre, including the Post-Settlement Treaty to these opportunities. For instance, a special Info-metrics Report on the economic of Waitangi Entities and the Taiwhenua hubs to ensure the welfare response impact of COVID-19 on the Hawke’s Bay region forecasts that employment will remained strong for our Whānau Pounamu community through Alert Level 4, and decline by -8.3%, or 7,000 jobs, between March 2020 and March 2021. The highest into Level 3. The Tihei Mauri Ora centre continued to operate albeit at a less number of job losses is expected in the low-skilled category. The general age and ‘intense’ level as the nation eventually moved to Level 1 where this work is skills profile of Hawke’s Bay Māori is skewed towards high levels of both younger ongoing. With potentially increasing numbers of higher stress, anxieties, health and lower skilled employees. Job losses therefore are forecast to have a issues and/or reduced incomes due to the impacts of COVID-19, it has been disproportionate impact on lower income Māori households. Māori who have lost extremely important that we work together to support our community; and in their jobs will need assistance to engage with the labour market and re-skill to take particular our Māori and Pasifika communities where there are large numbers of advantage of job opportunities as they emerge. To achieve this, organisations Whānau Pounamu. across the region are working collaboratively to identify affected employees and Our commitment to the social infrastructure of our community will be critical to provide assistance to support them get back into the workforce. Community ensuring the confidence and trust of the wider community in future opportunities support services, such as those provided by Te Taiwhenua o Heretaunga, Te that enable the community to flourish moving forward in this current COVID-19 Taiwhenua o Te Whanganui-a-Orotū and the local Councils, are working with Māori context, to identify and assist affected whānau. There is a strong and close relationship with MSD to identify affected persons and support them into employment. Mauri noho, mauri mate, mauri tū, mauri ora – doing nothing will see us languish, by being proactive in this space, our community will flourish!

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A social procurement approach will be a compulsory requirement when awarding contracts. It will be a condition of any contract that a specified number of employees must be persons redeployed from COVID-19 affected employment. A further contract condition will be the recruitment of apprentices to enable unemployed Māori to upskill or re-skill in a new trade. We have had to work more closely with our iwi and tangata whenua partners this past year to ensure the inclusive vitality of cultural life across the district; to strengthen partnership relationships and to reinforce Council’s responsiveness to issues important to tangata whenua. Ko koutou ki tēnā kīwai o te kete, ko mātau ki tēnei kīwai, ka anga whakamua tātau – with you the community at that handle of the basket, and us the Council at this handle of the basket, we can and will move forward together as partners. The metaphor of the ‘kete’ while singular in the whakataukī (proverb), refers to a number of kete, and kete that are held together, by Council, marae, hapū, iwi, Taiwhenua, PSGEs and other entities; there isn’t just one kete. Consequently, the capacity to exercise partnership in decision-making processes must recognise equitable contribution where Council remains committed to pursuing partnership with tangata whenua mana whenua.

Nō reira, e kiia nei te kōrero, ‘ko Kahungunu he tangata ahuwhenua, mōhio ki te whakahaere i ngā mahi o uta, o tai’. Nā ko tātau tēnei i naia tonu nei, arā, e whai ana i ngā tapuwae a kui mā, a koro mā kia anga whakamua i te ao hurihuri nei; tihei Heretaunga!

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Financial

statements

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Financial statements

Actual Council Actual Group Budget Council Actual Council Actual Group 2019 2019 Statement of comprehensive revenue and expense for 2020 2020 2020 $'000 $'000 the year ended 30 June 2020 Notes $'000 $'000 $'000 REVENUE 77,347 77,347 Rates, excluding metered water supply charges 3 82,165 81,814 81,814 Please note Group prior year comparatives have been 26,487 26,533 Fees, charges and metered water supply charges (i) 24,839 28,198 28,354 adjusted to allow for correct comparison to current year due to HB Regional Sports Park Trust now consolidated into the 20,161 21,163 Subsidies and Grants (ii) 16,364 21,772 22,418 Group accounts. 6,989 6,989 Development and financial contributions 5,408 4,281 4,281 The accompanying notes form part of these financial 134 134 Donations 3 90 90 statements. The major reasons for the variance between actual and 534 541 Interest revenue (iii) 4 - 478 489 budgeted surplus on operations were: 1,154 1,521 Other revenue (iv) 5 646 746 1,276 (i) Fees and charges increase across a number of 4,976 4,976 Vested infrastructural assets (v) 1,000 5,098 5,098 activities, this is reflective of stronger economic 137,781 139,204 Total revenue 130,425 142,477 143,819 conditions. This would have been a larger variance to budget but for COVID-19 impact for the month of EXPENSES lockdown. 89,763 89,607 Operational costs (vi) 6 87,040 96,113 96,873 (ii) The increase in New Zealand Transport Agency (NZTA) 34,085 34,624 Depreciation and amortisation expense 7 32,150 34,944 35,491 subsidies is the major factor in the favourable variance. 4,605 4,605 Finance costs (vii) 6,833 4,991 4,991 (iii) Interest Revenue – interest on surplus working capital reinvested. 128,453 128,836 Total expenses 126,023 136,048 137,355 (iv) Other Revenue – unbudgeted gains from disposal on 7,088 7,088 Unrealised Loss on Swaps (viii) 5,196 5,196 plant, property and equipment and unbudgeted - 107 Share of associate surplus/(deficit) (214) dividends. 2,240 3,387 Surplus/(deficit) before tax 4,403 1,232 1,054 (v) Vested Assets favourable due to increased development. - - Income Tax expense 8 - - - (vi) Operational Costs are higher due to increased 2,240 3,387 Surplus/(deficit) after tax 4,403 1,232 1,054 contracted services along with personnel costs due Other comprehensive revenue and expense: to increase activity and demand. 42,549 42,549 Gain/loss on infrastructural revaluations 67,470 41,152 41,152 (vii) Finance Costs – lower than budget, as consequence - 24 Gain/Loss on land and building revaluations - (5,223) (5,222) of lower than budgeted capital spend and favourable interest rates. 31 736 Gain/Loss on other revaluations - (30) (115) (viii) Unrealised loss on swaps – see Note 16. 42,580 43,309 Total other comprehensive revenue and expense 67,470 35,899 35,815

44,820 46,696 Total comprehensive revenue and expense 71,873 37,131 36,869

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Actual Council Actual Group Budget Council Actual Council Actual Group 2019 2019 Statement of comprehensive revenue and expense for 2020 2020 2020 $'000 $'000 the year ended 30 June 2020 Notes $'000 $'000 $'000 Net Surplus /(Deficit) attributable to: 2,240 3,387 Hastings District Council 4,403 1,232 1,054 - - Minority Interest - - - 2,240 3,387 4,403 1,232 1,054 Total comprehensive revenue and expense attributable to: 44,820 46,696 Hastings District Council 71,873 37,131 36,869 - - Minority Interest - - - 44,820 46,696 71,873 37,131 36,869

Actual Council Actual Group Budget Council Actual Council Actual Group 2019 2019 Statement of changes in equity for 2020 2020 2020 $’000 $’000 the year ended 30 June 2020 $’000 $’000 $’000 2,020,806 2,043,736 Balance at 1 July 1,860,953 2,065,626 2,090,432 Please note Group prior year comparatives have been 2,240 3,387 Surplus/Deficit 4,403 1,232 1,054 adjusted to allow for correct comparison to current year due to HB Regional Sports Park Trust now consolidated into the 42,580 43,309 Other comprehensive revenue and expense for the year 67,470 35,899 35,815 Group accounts. 44,820 46,696 Total comprehensive revenue and expense for the year 71,873 37,130 36,869 2,065,626 2,090,432 Balance at 30 June 1,932,826 2,102,756 2,127,302

Total comprehensive revenue and expense attributable to: 44,820 46,696 Hastings District Council 71,873 37,131 36,869 44,820 46,696 Total comprehensive revenue and expense 71,873 37,131 36,869

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Actual Council Actual Group Budget Council Actual Council Actual Group 2019 2019 Statement of financial position 2020 2020 2020 $'000 $'000 as at 30 June 2020 Notes $'000 $'000 $'000

CURRENT ASSETS 2,939 4,342 Cash & cash equivalents 1,265 - 536 The accompanying notes form part of these financial 12,455 12,801 Receivables (i) 9 10,434 13,241 13,699 statements. 55 55 Inventory 10 108 106 106 The major reasons for the variance between actual and - - Non-current assets held for sale - 1,693 1,693 budgeted balances at 30 June 20 were: 31 330 Short Term Investments (ii) - 14,180 14,607 (i) Receivables are higher than budget due to 15,480 17,528 Total current assets 11,807 29,220 30,641 NON-CURRENT ASSETS development contributions for the Irongate industrial Other financial assets development. - - Derivative financial instruments 16 - - - (ii) Short-term investments are higher due to prefunding 1,747 9,294 Investments in associates 11 (a) 1,066 1,063 7,912 invested until required for capital projects. 16 - Investments in CCOs and similar entities 11 (b) 941 15 - (iii) The increase in payable and deferred revenue on 2,460 2,460 Investment in other entities 11 (b) 1,568 3,172 3,172 budget is due to the timing of major infrastructure - - Other non-current assets - - 4 projects underway at 30 June 2020. 4,223 11,754 Total other financial assets 3,575 4,251 11,089 (iv) Secured loan levels were lower than budgeted at the 237,622 253,445 Plant, property and equipment 12 219,598 250,837 268,133 end of the financial year due to projects not 1,955,062 1,955,062 Infrastructural assets 12 1,858,890 2,019,005 2,019,005 60 60 Biological Assets 12 - 60 60 progressing as originally planned. 155 159 Intangible assets 205 294 294 2,197,123 2,220,479 Total non-current assets 2,082,268 2,274,447 2,298,580 2,212,603 2,238,007 Total assets 2,094,076 2,303,667 2,329,222 LIABILITIES Current liabilities - - Bank Overdraft - 254 254 23,578 23,989 Payables and deferred revenue (iii) 13 16,538 23,710 24,558 2,444 2,450 Employee entitlements 14 2,241 3,398 3,425 2,186 2,186 Derivative financial instruments 16 - 699 699 10,000 10,000 Borrowings and other financial liabilities (iv) 15 12,530 20,000 20,000 38,208 38,625 Total current liabilities 31,309 48,060 48,936 Non-current liabilities 800 981 Provisions and other non-current liabilities 13 659 1,640 1,772 349 349 Employee entitlements 14 480 333 333 11,380 11,380 Derivative financial instruments 16 13,500 18,063 18,063 96,240 96,240 Borrowings and other financial liabilities (iv) 15 115,301 132,815 132,815 108,769 108,950 Total non-current liabilities 129,940 152,851 152,983 146,977 147,575 Total liabilities 161,249 200,911 201,919 2,065,626 2,090,432 Net assets (assets minus liabilities) 1,932,827 2,102,756 2,127,302

Equity 1,238,844 1,260,909 Accumulated funds 17 1,133,055 1,239,788 1,261,679 3,648 3,648 Restricted Reserves 18 3,182 3,935 3,935 823,134 825,875 Revaluation Reserves 19 796,589 859,033 861,689 2,065,626 2,090,432 Total equity 1,932,827 2,102,756 2,127,302

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Actual Council Actual Group Budget Council Actual Council Actual Group 2019 2019 Statement of cash flows 2020 2020 2020

$'000 $'000 for the year ended 30 June 2020 Notes $'000 $'000 $'000 CASH FLOWS PROVIDED FROM OPERATING ACTIVITIES

Cash was provided from: 77,350 77,350 Receipts from rates revenue 82,165 81,548 81,548 39,640 39,948 Receipts from customers 30,893 43,033 45,358 534 542 Interest received - 477 490 159 159 Dividends and commissions received - 126 126 20,161 21,240 Subsidies and grants received 16,367 21,772 22,731

GST (net)

137,844 139,239 129,425 146,955 150,253

Cash was applied to: 93,025 92,890 Payments to suppliers and employees 87,040 102,443 104,499 4,377 4,377 Interest paid 6,833 5,009 5,009 (960) (947) GST (net) - 394 275

96,442 96,410 93,873 107,846 109,783 41,402 42,829 Net cash flows from operating activities (A) 20 35,553 39,109 40,470 CASH FLOWS FROM INVESTING ACTIVITIES Cash was provided from: 3,210 3,225 Receipts from sale of property, plant and equipment 422 1,811 1,811 194 354 Losses and impairment/revaluation prior year - - -

3,404 3,579 422 1,811 1,811

Cash was applied to: 72,008 72,381 Purchase of property, plant & equipment and infrastructural assets 71,993 72,915 75,015 - 227 Purchase of investments 383 14,149 14,281

72,008 72,608 72,376 87,064 89,296 (68,604) (69,029) Net cash flows to investing activities (B) (71,954) (88,876) (91,106)

CASH FLOWS FROM FINANCING ACTIVITIES Cash was provided from: 40,501 40,501 Proceeds from borrowings 41,691 46,574 46,574

Cash was applied to: 12,000 12,134 Repayment of borrowings 5,290 - - 28,501 28,367 Net cash flows from financing activities 36,401 46,574 46,574 1,300 2,165 Net increase (decrease) in cash, cash equivalents and bank overdraft - (3,192) (4,060) (A+B+C) 1,640 2,177 Cash, cash equivalents and bank overdraft at the beginning 1,265 2,939 4,342 of the year 2,939 4,342 Cash, cash equivalents and bank overdraft at the end of the year 1,265 (254) 282

CASH AT END OF YEAR COMPRISES 2,939 4,342 Cash and cash equivalents 1,265 (254) 282

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Notes to financial statements

1. Statement of accounting policies The primary objective of the Council and Group is to provide goods and services for the community or social benefit rather than making a financial return. Accordingly the Reporting entity Group is a public benefit entity (PBE) for the purposes of financial reporting. Hastings District Council (‘the Council’) is a territorial authority within the definition of The financial statements of the Council and Group are for the year ended 30 June 2020. the Local Government Act 2002 and domiciled in New Zealand. The financial statements were authorised for issue by Council on 8 December 2020. The operations of the Council are divided into the following activity groups: Basis of preparation • Water and Roads Statement of compliance • Safe Healthy and Liveable Communities The financial statements of the Council and Group have been prepared in accordance • Economic and Community Development with the requirements of the Local Government Act 2002, which includes the • Governance and Support Services. requirement to comply with New Zealand Generally Accepted Accounting Practice (NZ GAAP). The Hastings District Council Group consists of the ultimate parent, the Council, and the following subsidiaries (the Group): The financial statements comply with PBE Standards. The financial statements have been prepared in accordance with Tier 1 PBE Standards. There are no material Te Mata Park Trust Board HB Regional Sports Park Trust Hastings District Holdings Ltd adjustments arising on transition to the new PBE accounting standards. The accounting 100% 100% 100% policies set out below have been applied consistently to all periods presented in these financial statements. The Council also has the following investments in associates: The Council and Group financial statements presented in this Annual Report include a statement of comprehensive revenue and expense, a statement of cash flows, a • Hawke's Bay Airport Limited, a Council Controlled Organisation, is an equity- statement of financial position and a statement of changes in equity, with supporting accounted associate in which the Council holds a 24% shareholding. notes, encompassing all activities of the Council. • Horse of the Year (Hawke's Bay) Limited is an equity-accounted associate in which In order to meet its obligations of public accountability, the Council has also included for the Council holds a 33% shareholding. each group of activity funding impact statements for the whole of Council. The Council has a 1.7% interest in the Local Government Funding Agency. Measurement base The Omarunui Refuse Landfill is a jointly controlled asset. The Council includes only its The measurement base adopted is that of historical cost, modified by the revaluation of 63.68% share of all revenue, expenditure, assets and liabilities of the landfill facility. certain classes of property, plant and equipment, and financial instruments (including derivative instruments).

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Functional and presentation currency In instances where an entity is precluded by PBE IPSAS 29 from measuring the retained The financial statements are presented in New Zealand dollars and all values are interest in a former associate or joint venture at fair value, the carrying amount may be rounded to the nearest thousand dollars ($'000). The functional currency of the Council used as cost on initial recognition of the financial asset, were previously not allowed is New Zealand dollars. under PBE IPSAS 7. Changes in accounting policies PBE IPSAS 36 also contemplates the accounting for interests in investment entities and A number of new standards, interpretations and amendments effective for the first time requires the investor to retain the fair value measurement applied by the investment for periods beginning on 1 July 2019 have been adopted in these financial statements. entity associate or joint venture. The nature and effect of each new standard, interpretation and amendment adopted by The adoption of PBE IPSAS 36 had no effect on the Council as: the Council is detailed below. Not all new standards and interpretations effective for the • The Council has interest in an associate accounted for under equity method under time for periods commencing 1 July 2019 affect the Council’s financial statements for PBE IPSAS 7 and the mechanics of equity method has not changed under IPSAS 36. the year ended 30 June 2020. • There are no interests classified as joint venture as a result of the changes in PBE PBE IPSAS 35 Consolidated Financial Statements IPSAS 37 mentioned which would have otherwise been accounted for under PBE IPSAS 35 supersedes PBE IPSAS6 (NFP) Consolidated and Separate Financial IPSAS 36. Statements and introduces a single ‘control model’ for all entities whereby control exists PBE IPSAS 37 Joint Arrangements when all of the following conditions are present: PBE IPSAS 37 supersedes PBE IPSAS 8 Interests in Joint Ventures and requires joint • Power over investee. arrangements to be classified as either: • Exposure, or rights, to variable returns from investee. • Joint operations – where parties with joint control have rights to assets and • Ability to use power over investee to affect the entity’s returns from investee. obligations for liabilities, or The adoption of PBE IPSAS 35 has meant a change where Hawke’s Bay Regional Sports • Joint ventures – where parties with joint control have rights to the net assets of the Park Trust is concerned. Following an assessment, the Trust is identified as an associate. investee. Given the Council’s level of influence and financial support the Trust has been Joint arrangements that are structured through a separate vehicle will generally be consolidated into the Group’s financial statements. treated as joint ventures, unless the terms of the contractual arrangements, or other facts and circumstances indicate, that the parties have rights to assets and obligations PBE IPSAS 36 Investments in Associates and Joint Ventures for liabilities of the arrangement, rather than rights to net assets. PBE IPSAS 36 supersedes PBE IPSAS7 Investments in Associates and combines the The adoption of PBE IPSAS 37 had no effect on the Council’s joint arrangements as: accounting for both associates and joint ventures as a result of requiring the use of the equity method to account for investments in joint ventures as well as for investments in • The new definition of joint control has not resulted in a change in the recognition associates. and non-recognition of the Council’s arrangements with other parties. The scope of PBE IPSAS 36 has been expanded to include all ‘quantifiable ownership • The Council’s joint arrangement pertains to a jointly controlled asset and interests’ – while an ownership interest in an associate to be ‘in the form of a arrangements that were classified under PBE IPSAS 8 as joint controlled assets and shareholding or other formal equity structure’ was required under PBE IPSAS 7. jointly controlled operations are classified as joint operation under PBEW IPSAS 37 with similar accounting requirements.

• The Council does not have interest in jointly controlled entities which would have otherwise been classified as joint venture under PBE IPSAS 37.

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PBE IPSAS 38 Disclosure of Interests in Other Entities Investments in subsidiaries are carried at cost in the Council's separate financial PBE IPSAS 38 sets out the disclosure requirements relating to an entity’s interests in statements. controlled entities, joint arrangements, associates and structured entities. The standard The interest in the Te Mata Park Trust Board has been reflected in the consolidated requires a reporting entity to disclose information that helps users to assess the nature financial statements and accounted for using the purchase method. This involves adding and financial effects of the report entity’s relationship with other entities. corresponding assets, liabilities, revenues and expenses on a line-by-line basis. As the new standard affects only disclosure, there is no effect on the Council’s financial The interest in the Hawke’s Bay Regional Sports Park Trust has been reflected in the position or performance. consolidated financial statements and accounted for using the purchase method. This All other accounting policies and disclosures have been applied consistent with those involves adding corresponding assets, liabilities, revenues and expenses on a line-by-line applied in the previous financial year. basis. Financial instruments Hastings District Holdings Limited are 100% owned by the Council and provides Council In January 2017, the XRB issued PBE IFRS 9 Financial Instruments. PBE IFRS 9 replaces with an extra layer of governance and a monitoring structure for Council's other CCOs PBE IPSAS 29 Financial Instruments: Recognition and Measurement. PBE IFRS 9 is which include Hawke's Bay Opera House Limited and Hastings District Properties effective for annual periods beginning on or after 1 January 2021, with early application Limited. permitted. The main changes under PBE IFRS 9 are: Associate • New financial asset classification requirements for determining whether an asset is The Council's associate investment is accounted for in the Group financial statements measured at fair value or amortised cost. using the equity method. An associate is an entity over which the Council has significant • A new impairment model for financial assets based on expected losses, which may influence and that is neither a subsidiary nor an interest in a joint venture. The result in the earlier recognition of impairment losses. investment in an associate is initially recognised at cost and the carrying amount in the • Revised hedge accounting requirements to better reflect the management of risk. Group financial statements is increased or decreased to recognise the Group's share of the surplus or deficit of the associate after the date of acquisition. Distributions received The Council plans to apply this standard in preparing its 30 June 2022 financial from an associate reduce the carrying amount of the investment. statements. The Council and Group have not yet assessed the effects of the new standard. If the share of deficits of an associate equals or exceeds its interest in the associate, the Group discontinues recognising its share of further deficits. After the Group's interest is Significant accounting policies reduced to zero, additional deficits are provided for, and a liability is recognised, only to Basis of consolidation the extent that the Council has incurred legal or constructive obligations or made The consolidated financial statements are prepared adding together like items of assets, payments on behalf of the associate. If the associate subsequently reports surpluses, liabilities, equity, revenue and expenses on a line-by-line basis. All significant intragroup the Group will resume recognising its share of those surpluses only after its share of the balances, transactions, revenue and expenses have been eliminated on consolidation. surpluses equals the share of deficits not recognised. Subsidiaries The Council's 24% share of the profit of Hawke's Bay Airport Limited is recognised in the The Council consolidates in the Group financial statements all entities where the Council period which matches the reporting period of the Airport Authority. The investment has has the capacity to control their financing and operating policies so as to obtain benefits been equity accounted. from the activities of the subsidiary. The power exists where the Council controls the The Council's 33% share of the profit of Horse of the Year (Hawke’s Bay) Limited is majority voting power on the governing body or where such policies have been recognised in the period which matches the reporting period ending 31 May 2020. The irreversibly predetermined by the Council or where the determination of such policies is investment has been equity accounted. unable to materially affect the level of potential ownership benefits that arise from the activities of the subsidiary.

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Joint Arrangements Fees and charges The Council is a party to a joint arrangement when there is a contractual arrangement Revenue from the provision of services in a non-exchange transaction is recognised that confers joint control over the relevant activities of the arrangement to the Council when the Group obtains control of the transferred asset and when the transfer is free and at least one other party. Joint control is assessed under the same principles as from conditions that require the asset to be refunded or returned if the conditions are control over subsidiaries. not met. To the extent there is a condition attached that gives rise to a liability to return Joint Operation the asset, a deferred-revenue liability is recognised. Revenue is then recognised when the Group has satisfied the conditions. Fees and charges that are non-exchange The Council has an interest in a joint arrangement that is a jointly controlled asset. The transactions include parking fines and infringements and dog licences. Council recognises its share of the asset, classified as plant and equipment. In addition, the Council recognises its share of liabilities, expenses and income from the use and Government grants output of the jointly controlled asset. Government grants are received from the New Zealand Transport Agency, which The Omarunui Refuse Landfill is a jointly-controlled asset and the Council's subsidises part of the costs of maintaining the local roading infrastructure. The subsidies proportionate interests (63.68%) in the assets, liabilities, revenue and expenses have are recognised as revenue upon entitlement, as conditions pertaining to eligible been incorporated in Council's financial statements under the appropriate headings. expenditure have been fulfilled. Other Government grants are recognised as revenue when they become receivable Revenue unless there is an obligation in substance to return the funds if conditions of the grant Revenue is recognised to the extent that it is probable that the economic benefits or are not met. If there is such an obligation, the grants are initially recorded as grants service potential will flow to the Group and the revenue can be reliably measured, received in advance and recognised as revenue when conditions of the grant are regardless of when payment is made. Revenue is measured at the fair value of satisfied. consideration received or receivable. Vested assets The specific recognition criteria described below must also be met before revenue is recognised. Assets vested in the Council are recognised when control over the asset is obtained and as revenue when the transferred asset is free from conditions that require the asset to Revenue from non-exchange transactions be returned if the conditions are not met. Where a physical asset is acquired for nil or General and targeted rates (excluding user charge water rates) nominal consideration, the fair value of the asset received is recognised. Rates are set annually by a resolution from Council and relate to a financial year. Revenue from exchange transactions All ratepayers are invoiced within the financial year to which the rates have been set. Development contributions Rates revenue is recognised at the start of the financial year to which the rates Development and financial contributions are recognised as revenue when the Council resolution relates. provides, or is able to provide, the service for which the contribution was charged. Rates collected on behalf of the Hawke’s Bay Regional Council (HBRC) are not Otherwise development and financial contributions are recognised as liabilities until recognised in the financial statements, as the Council is acting as an agent for the HBRC. such time as the Council provides, or is able to provide, the service. User pays water rates Revenue from water rates by meter is recognised on an accrual basis. Unbilled usage, as a result of unread meters at year end, is accrued on an average usage basis.

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Fees and charges Income tax Revenue from the rendering of services is recognised by reference to the stage of The Council is exempt from income tax except on income received from Council completion of the transaction at balance date, based on the actual service provided as a Controlled Trading Organisations. percentage of the total services to be provided. Fees and charges that are exchange Income tax expense includes current tax and deferred tax. transactions include consent fees and permits. Current tax is the amount of income tax payable based on the taxable surplus for the Revenue from the sale of goods is recognised when the risks and rewards of ownership current year, plus any adjustments to income tax in respect of prior years. Current tax is pass to the buyer. calculated using rates that have been enacted or substantially enacted by balance date. Other revenue Deferred tax is the amount of income tax payable or recoverable in future periods in Investment revenue in the form of interest is recognised using the effective interest respect of temporary differences and unused tax losses. Temporary differences are method. differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable surplus. Dividend revenue is recognised when the right to receive payment has been established. Deferred tax liabilities are generally recognised for all taxable temporary differences. Cost allocation Deferred tax assets are recognised to the extent that it is probable that any taxable The cost of service for each significant activity of Council has been derived using the surplus will be available against which the deductible temporary differences or tax cost allocation system outlined below. losses can be utilised. Direct costs are those costs directly attributable to a significant activity. Indirect costs Deferred tax is not recognised if the temporary differences arise from the initial are those costs that cannot be identified in an economically feasible manner with a recognition of goodwill or from the initial recognition of an asset and liability in a specific significant activity. transaction that is not a business combination and, at the time of the transaction, Direct costs are charged directly to significant activities. Indirect costs are charged to affects neither accounting surplus nor taxable surplus. significant activities using appropriate cost drivers such as actual usage, staff numbers Deferred tax is neither recognised on taxable temporary differences arising on and floor area. investments in subsidiaries and associates, and interests in joint ventures, except where Goods and Services Tax (GST) the company can control the reversal of the temporary difference and the temporary All items in the financial statements are stated exclusive of goods and services tax (GST), difference will not reverse in the foreseeable future. except for debtors and other receivables and creditors and other payables, which are Deferred tax is measured at the tax rates that are expected to apply when the asset is presented on a GST-inclusive basis. GST not recoverable as input tax is recognised as realised or the liability is settled, based on tax rates (and tax laws) that have been part of the related asset or expense. enacted or substantively enacted at balance day. The measurement of deferred tax The net amount of GST recoverable from, or payable to, the Inland Revenue reflects the tax consequences that would follow from the manner in which the group Department (IRD) is included as part of receivables or payables in the statement of expects to recover or settle the current amount of its assets and liabilities. financial position. Current and deferred tax is recognised against the surplus or deficit for the period, The net GST paid to, or received from, the IRD, including the GST relating to investing except to the extent that it relates to a business combination, or to transactions and financing activities, is classified as an operating cash flow in the statement of cash recognised in other comprehensive revenue and expenses or directly in equity. flows. Future tax benefits attributable to tax losses or timing differences are only recognised Commitments and contingencies are disclosed exclusive of GST. when there is virtual certainty of realisation.

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Leases Statement of cash flows Operating leases The year-end cash balance in the Statement of Cash Flows consists of cash on hand; An operating lease is a lease that does not transfer substantially all the risks and reward bank account balances, plus call deposits that form part of the day-to-day cash management of the Council. incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term. The cash flows are classified into three sources: Finance leases 1) Operating activities – includes cash received from all revenue sources of Council and cash paid for the supply of goods and services, including interest on debt A finance lease is a lease that transfers to the lessee substantially all the risks and 2) Investing activities – includes the purchase and sale of long-term assets and rewards incidental to ownership of an asset, whether or not title is eventually investments such as land and buildings, term investments, infrastructural and transferred. other operational assets At the commencement of the lease term, finance leases are recognised as assets and 3) Financing activities – includes movements in the Council's public debt from loans liabilities in the statement of financial position at the lower of the fair value of the raised and loans repaid leased item or the present value of the minimum lease payments. Financial assets The finance charge is charged to the surplus or deficit over the lease period so as to PBE Standards classify financial assets into four categories: financial assets at fair value procure a constant periodic rate of interest on the remaining balance of the liability. through surplus or deficit, held-to-maturity investments, loans and receivables, and The amount recognised as an asset is depreciated over its useful life. If there is no financial assets at fair value through other comprehensive revenue and expenses. The certainty as to whether the Council will obtain ownership at the end of the lease term, Council does not have held-to-maturity investments. the asset is fully depreciated over the shorter of the lease term and its useful life. The classification depends on the purpose for which the investments were acquired. Grant expenditure Management determines the classification of its investments at initial recognition and Non-discretionary grants criteria are recognised as expenditure when an application re-evaluates this designation at every reporting date. that meets the specified criteria for the grant has been received. Financial assets and liabilities are initially measured at fair value plus transaction costs unless they are carried at fair value through surplus or deficit in which case the transaction Discretionary grants are those grants where the Council has no obligation to award on costs are recognised in the statement of comprehensive revenue and expenses. receipt of the grant application and are recognised as expenditure when a successful applicant has been notified of Council's decision. The three categories of financial assets are: (a) Financial assets at fair value through surplus or deficit Borrowing costs This category has two sub categories: financial assets held for trading, and those All borrowing costs are recognised as an expense in the period in which they are designated at fair value through surplus or deficit at inception. A financial asset is incurred. classified in this category if acquired principally for the purpose of selling in the short term or if so, designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for

trading or are expected to be realised within 12 months of the balance sheet date. After initial recognition they are measured at their fair values with gains or losses on re-measurement recognised in the statement of comprehensive revenue and expenses. Financial Assets in this category include Interest Rate Swaps.

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(b) Loans and receivables recognised in the surplus or deficit. When the receivable is uncollectible, it is written-off These are non-derivative financial assets with fixed or determinable payments that are against the allowance account. Overdue receivables that have been renegotiated are not quoted in an active market. reclassified as current (that is, not past due). Impairment of term deposits, local After initial recognition they are measured at amortised cost using the effective interest authority stock, government stock, and community loans are recognised directly against method less impairment. Gains and losses when the asset is impaired or derecognised the instrument's carrying amount. are recognised in the surplus or deficit. Loans and receivables are classified as ‘Debtors Financial assets at fair value through other comprehensive revenue and expenses and other receivables’ in the statement of financial position. For equity investments, a significant or prolonged decline in the fair value of the (c) Financial assets at fair value through other comprehensive revenue and expenses investment below its cost is considered objective evidence of impairment. Financial assets at fair value through other comprehensive revenue and expenses are For debt investments, significant financial difficulties of the debtor, probability that the those that are designated into the category at initial recognition or are not classified in debtor will enter into bankruptcy, and default in payments are considered objective any of the other categories above. After initial recognition, these investments are indicators that the asset is impaired. measured at their fair value. If impairment evidence exists for investments at fair value through other comprehensive Gains and losses are recognised in other comprehensive revenue and expenses except revenue and expenses, the cumulative loss (measured as the difference between the for impairment losses, which are recognised in the statement of comprehensive acquisition cost and the current fair value, less any impairment loss on that financial asset revenue and expenses. On derecognition, the cumulative gain or loss previously previously recognised in the surplus or deficit) recognised in other comprehensive recognised in other comprehensive revenue and expenses is re-classified from equity to revenue and expenses is reclassified from equity to the surplus or deficit. the statement of comprehensive revenue and expenses. Equity instrument impairment losses recognised in the surplus or deficit are not Accounting for derivative financial instruments and hedging activities reversed through the surplus or deficit. If, in a subsequent period, the fair value of a Council uses derivative financial instruments to economically hedge exposure to interest debt instrument increases and the increase can be objectively related to an event rate risk arising from financing activities. Council's derivative financial instruments are occurring after the impairment loss was recognised, the impairment loss is reversed in not designated as hedging instruments for accounting purposes. Accordingly, derivative the surplus or deficit. financial instruments are reported as financial instruments at fair value through surplus Property, Plant & Equipment or deficit. Property, plant and equipment consist of: Impairment of financial assets • Operational assets – these include land, buildings, landfill post closure, library Financial assets are assessed for objective evidence of impairment at each balance date. books, plant and equipment, and motor vehicles. Impairment losses are recognised in the surplus or deficit. • Restricted assets – restricted assets are parks and reserves owned by the Council Loans and other receivables and Group that provide a benefit or service to the community and cannot be Impairment is established when there is objective evidence that the Council and Group disposed of because of legal or other restrictions. will not be able to collect the amount due according to the original terms of the debt. • Infrastructural assets – infrastructure assets are the fixed utility systems owned by Significant financial difficulties of the debtor, probability that the debtor will enter into the Council and Group. Each asset class includes all items that are required for the bankruptcy and default in payments are considered indicators that the asset is impaired. network to function. For example, sewer reticulation includes reticulation piping The amount of the impairment is the difference between the asset's carrying amount and sewer pump stations. and the present value of estimated future cash flows, discounted using the original effective interest rate. For debtors and other receivables, the carrying amount of the Property, plant and equipment are shown at cost or valuation, less accumulated asset is reduced through the use of an allowance account, and the amount of the loss is depreciation and impairment losses.

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(a) Revaluation Infrastructure assets for Roading were valued at May 2019 by Kevin Dunn of Beca, using Land and Buildings (operational and restricted), library books, and infrastructural assets the depreciated replacement cost method. Infrastructure assets for water (excluding (except land under roads) are revalued with sufficient regularity to ensure that their land) were valued at June 2020 at depreciated replacement cost by the Council’s carrying amount does not differ materially from fair value and at least every three years engineers and independently reviewed by Ms Jennifer Fox of Waugh Infrastructure with the exception of heritage assets which are valued every five years. All other asset Management Ltd. Land in this infrastructure class (water) were revalued by Mr John classes are carried at depreciated historical cost. Reid (M Property Studies, B Com, ANZIV, SNZPI) of Added Valuation Ltd at June 2018. The carrying values of revalued assets are assessed annually to ensure that they do not These values were determined by calculation of the current cost of replacement differ materially from the assets' fair values. If there is a material difference, then the adjusted by the estimated remaining useful life of the asset. Future revaluations off-cycle asset classes are revalued. (excluding land) will take place at two yearly intervals. Revaluations of property, plant, and equipment are accounted for on a class-of-asset Parks assets replacement cost values were completed by Council’s staff in May 2019 basis. and independently reviewed by Pauline True (BE Civil) of MWH Ltd (now part of Stantec). The values were determined by calculation at the current cost of replacement The net revaluation results are credited or debited to other comprehensive revenue and adjusted by the estimated remaining useful life of the asset. Future revaluations expenses and are accumulated to an asset revaluation reserve in equity for that class of (excluding land) will take place at two yearly intervals. asset. Where this would result in a debit balance in the asset revaluation reserve, this (b) Additions balance is not recognised in other comprehensive revenue and expenses but is recognised in the surplus or deficit. Any subsequent increase on revaluation that The cost of an item of property, plant, and equipment is recognised as an asset if, and only reverses a previous decrease in value recognised in the surplus or deficit will be if, it is probable that future economic benefits or service potential associated with the recognised first in the surplus or deficit up to the amount previously expressed, and item will flow to the Council and Group and the cost of the item can be measured reliably. then recognised in other comprehensive revenue and expenses. Infrastructural asset additions between valuations are recorded at cost, except for assets which are vested in the Council as part of the sub-divisional consent process. Land and Buildings were revalued in June 2018 by Mr John Reid (M Property Studies, Vested infrastructure assets are valued based on the Council's standard unit cost rate. B Com, ANZIV, SNZPI) of Added Valuation Ltd. Wherever possible, land and buildings are valued at net current value. Those buildings which cannot be easily sold are valued at Work-in-progress is recognised at cost less impairment and is not depreciated. depreciated replacement cost. Future revaluations will take place at three yearly Property, plant, and equipment are recognised at cost. Where an asset is acquired at no intervals. The Te Mata Park Trust Board assets are recorded at cost less accumulated cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition. depreciation to date. (c) Disposals Library Collections are valued at depreciated replacement cost in accordance with Gains and losses on disposals are determined by comparing the disposal proceeds with guidelines established by the New Zealand Libraries Association. Library valuations are the carrying amount of the asset. Gains and losses on disposals are reported net in the performed through a model created by an independent valuer, Dr Robin Watt MA surplus or deficit. When revalued assets are sold, the amounts included in asset (Hons.) PhD of R.J. Watt & Associates. The last valuation was performed as at June 2020. revaluations reserves in respect of those assets are transferred to accumulated funds. Plant, Machinery and Vehicles are recorded at cost less accumulated depreciation to date. (d) Depreciation The Council's 63.68% share of all assets of the Omarunui Refuse Landfill has been Land is not depreciated. included at cost less accumulated depreciation. All other assets with the exception of Plant, Machinery and Vehicles are depreciated on a straight-line basis at rates estimated to write off their cost over the expected useful Kate Srzich of Webb’s valued the heritage assets in June 2018, with the valuation being economic life. Plant, Machinery and Vehicles are depreciated using a combination of based on images and descriptions provided. The assets were valued on the basis of net straight line and diminishing value. The expected lives of major classes of assets are as current replacement costs. Future revaluations will take place at five yearly intervals. follows:

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Expected life (years) Expected life (years) (e) Subsequent costs BUILDINGS Furniture and Fittings 4 – 14 Costs incurred subsequent to initial acquisition are capitalised only when it is probable Structure/Envelope 20 – 65 Computer and Office Equipment 2 – 5 that future economic benefits or service potential associated with the item will flow to Building Services 15 – 35 Library Collections 5 – 10 the Council and the cost of the item can be measured reliably. Building Fit Out 30 – 50 LANDFILL The costs of day-to-day servicing of property, plant, and equipment are recognised in Heavy Plant and Machinery 7 – 10 Permanent Facilities 42 the surplus or deficit as they are incurred. Other Plant and Machinery 2 – 15 Valley A & D Development 12 – 15 Intangible assets Motor Vehicles 4 – 15 Other 5 Software acquisition and development WATER SUPPLY ROADING NETWORK Acquired computer software licences are capitalised on the basis of the costs incurred Pipes 27 – 120 Top Surface (seal) 13 to acquire and bring to use the specific software. Valves, hydrants 50 – 80 Pavement (including kerbs) 30 – 85 Pump Stations 15 – 80 Formation Not depreciated Costs that are directly associated with the development of software for internal use are recognised as an intangible asset. Direct costs include the software development Bores 50 Footpaths 20 – 75 employee costs and an appropriate portion of relevant overheads. Reservoirs 100 Street Lights (poles) 50 Treatment Plant 5 – 20 Traffic Signals 15 Staff training costs are recognised in the surplus or deficit when incurred. STORMWATER DISPOSAL Signs 10 – 15 Costs associated with maintaining computer software are recognised as an expense Pipes 100 Unsealed Roads Not depreciated when incurred. Manholes 100 Roading Land Not Depreciated Amortisation Detention Dams 100 Bridges & Culverts 85 The carrying value of an intangible asset with a finite life is amortised on a straight-line Open Channels 50 basis over its useful life. Amortisation begins when the asset is available for use and Service Laterals 80 ceases at the date that the asset is derecognised. The amortisation charge for each PARKS WASTERWATER period is recognised in the surplus or deficit. The useful lives and associated Soft Landscaping 38 – 75 Pipes 25 – 100 amortisation rates of major classes of intangible assets have been estimated as follows: Hard Landscaping 6 – 100 Manholes 80 Computer software 3 years 33.3% Playgrounds 7 – 50 Pump Stations 15 – 80 Services 30 – 80 Treatment Plant 20 Impairment of property plant and equipment and intangible assets measured at Structures 6 – 100 Submarine Outfall 50 depreciated cost Buildings 6 – 100 Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying The residual value and useful life of an asset is reviewed, and adjusted if applicable, at amount may not be recoverable. The indicators of impairment depend on whether the each financial year end. asset is cash generating or non-cash generating. Non-cash-generating assets are those assets that are not held with the primary objective of generating a commercial return. The majority of the Council and Groups assets that are not revalued are non-cash generating. For non-cash-generating assets, value in use is determined based on a depreciated replacement cost approach.

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An impairment loss is recognised for the amount by which the asset's carrying amount Employee entitlements exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair Short-term employee entitlements value less costs to sell and value in use. Employee benefits expected to be settled within 12 months of balance date are Value in use is depreciated replacement cost for an asset where the future economic measured at nominal values based on accrued entitlements at current rates of pay. benefits or service potential of the asset are not primarily dependent on the asset’s These include salaries and wages accrued up to balance date, annual leave earned to, ability to generate net cash inflows and where the entity would, if deprived of the asset, but not yet taken, at balance date. replace its remaining future economic benefits or service potential. Long-term employee entitlements The value in use for cash-generating assets is the present value of expected future cash Employee benefits which are due to be settled beyond 12 months after the end of the flows. period in which the employee renders the related service, such as long service leave, If the asset's carrying amount exceeds its recoverable amount, the asset is impaired and have been calculated on an actuarial basis. The calculation is based on: the carrying amount is written down to the recoverable amount. For revalued assets, • the impairment loss is recognised against the revaluation reserve for that class of asset. Likely future entitlements accruing to staff, based on years of service, years of Where that results in a debit balance in the revaluation reserve, the balance is entitlement, the likelihood that staff will reach the point of entitlement, and recognised in the surplus or deficit. For assets not carried at a revalued amount, the contractual entitlement information; and total impairment loss is recognised in the surplus or deficit. The reversal of an • The present value of the estimated future cash flows. impairment loss on a revalued asset is credited to other comprehensive revenue and Expected future payments are discounted using market yields on government bonds at expense and increases the asset revaluation reserve for that class of asset. However, to balance date with terms of maturity that match, as closely as possible, the estimated the extent that an impairment loss for that class of asset was previously recognised in future cash outflows for entitlements. The inflation factor is based on the expected long the surplus or deficit, a reversal of the impairment loss is also recognised in the surplus term increase in remuneration for employees. or deficit. For assets not carried at a revalued amount, the reversal of an impairment Superannuation schemes loss is recognised in the surplus or deficit. Defined contribution schemes Inventories Obligations for contributions to defined contribution superannuation schemes are Inventory held for use in the production of goods and services on a commercial basis is recognised as an expense in the surplus or deficit as incurred. valued at the lower of cost and net realisable value. The cost of purchased inventory is determined using the first in first out basis. Defined benefit schemes The Council belongs to the Defined Benefit Plan Contributors Scheme, which is managed Cash and cash equivalents by the National Provident Fund. The scheme is a multi-employer defined benefit Cash and Cash Equivalents includes cash in hand, deposits held at call with banks, other short-term highly-liquid investments, original maturities of three months or less, and scheme. Insufficient information is available to use defined benefit accounting, as it is bank overdrafts. not possible to determine from the terms of the scheme, the extent to which the surplus/deficit will affect future contributions by individual employers, as there is no Debtors and other receivables prescribed basis for allocation. The scheme is therefore accounted for as a defined Debtors and other receivables are initially measured at fair value and subsequently contribution scheme. measured at amortised cost using face value, less any provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Council will not be able to collect all amounts due according to the original terms of receivables. The amount of provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted using the effective interest method.

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Landfill post-closure costs Any increases in fair value (less costs to sell) are recognised up to the level of any The Council, as operator and 63.68% owner of the Omarunui landfill, has a legal impairment losses that have been previously recognised. obligation under the resource consent to provide ongoing maintenance and monitoring Non-current assets (including those that are part of a disposal group) are not services at the landfill site after closure. The Council's 63.68% share of a provision for depreciated or amortised while they are classified as held for sale. Interest and other post-closure costs is recognised as a liability when the obligation for post-closure arises. expenses attributable to the liabilities of a disposal group classified as held for sale The provision is measured based on the present value of future cash flows expected to continue to be recognised. be incurred, taking into account future events including new legal requirements and Provisions known improvements in technology. The provision includes all costs associated with Council recognises a provision for future expenditure of uncertain amount or timing landfill post-closure. when there is a present obligation (either legal or constructive) as a result of a past Amounts provided for landfill post-closure are capitalised to the landfill asset where event, it is probable that expenditures will be required to settle the obligation and a they give rise to future economic benefits to be obtained. Components of the reliable estimate can be made of the amount of the obligation. Provisions are not capitalised landfill asset are depreciated over their useful lives. recognised for future operating losses. The discount rate used is a pre-tax rate that reflects current market assessments of the Provisions are measured at the present value of the expenditures expected to be time value of money and the risks specific to the Council. required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. Investment properties The increase in the provision due to the passage of time is recognised as an interest Investment Properties are valued at fair value which is measured annually. Revaluation expense and is included in ‘finance costs.’ increments and decrements are recognised in the surplus or deficit. Properties leased to third parties under operating leases are classified as investment property unless the Equity property is held to meet service delivery objectives, rather than to earn rentals or for Equity is the community's interest in Council and is measured as the difference between capital appreciation. Council currently has no properties classified as investment total assets and total liabilities. Equity is disaggregated and classified into a number of properties. Properties owned to provide housing for pensioners are held as part of the reserves. Council's social housing policy and are accounted for as property, plant and equipment. The components of equity are: retained earnings, restricted reserves and asset Borrowings revaluation reserves. Borrowings are initially recognised at their fair value net of transaction costs incurred. Restricted reserves are a component of equity generally representing a particular use to After initial recognition, all borrowings are measured at amortised cost using the which various parts of equity have been assigned. Reserves may be legally restricted or effective interest method. created by Council. Restricted reserves are those subjected to specific conditions Non-current assets held for sale accepted as binding by the Council and which may not be revised by Council without Non-current assets held for sale are classified as held for sale if their carrying amount reference to the Courts or a third party. Transfers from these reserves may only be will be recovered principally through a sale transaction, not through continuing use. made for certain specified purposes or when certain specified conditions are met. Non-current assets held for sale are measured at the lower of their carrying amount and Council-created reserves are reserves established by Council decision. The Council may fair value less costs to sell. alter them without reference to any third party or the Courts. Transfers to and from Any impairment losses for write downs of non-current assets held for sale are these reserves are at the discretion of Council. recognised in the surplus or deficit. Property revaluation reserves relates to the revaluation of property, plant and equipment to fair value.

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Budget figures • Estimates are made when determining the remaining useful lives over which the asset will be depreciated. These estimates can be impacted by local conditions, for The budget figures are those approved by the Council in its 2018-28 Long Term Plan. example weather patterns and traffic growth. If useful lives do not reflect the actual The budget figures have been prepared in accordance with NZ GAAP, using accounting consumption of the benefits of the asset, then Council could be over or under policies that are consistent with those adopted by the Council for the preparation of the financial statements. estimating the annual depreciation charge recognised as an expense in the statement of comprehensive revenue and expenses. To minimise this risk, Council's Comparative figures infrastructural asset useful lives have been determined with reference to the NZ Comparative figures disclosed in the accounts may have minor changes to those Infrastructural Asset Valuation Guidelines published by the National Asset presented in the 2018/19 Annual Report. This has only been done in cases where the Management Steering Group, and have been adjusted for local conditions based on changes result in more meaningful comparisons, or to comply with the new past experience. Asset inspections, deterioration and condition modelling are also presentation requirements of the Local Government (Financial Reporting and Prudence) carried out regularly as part of the Council's asset management planning activities, Regulations 2014. which gives Council further assurance over its useful life estimates. Critical accounting estimates and assumptions Experienced independent valuers peer review the Council's infrastructural asset In preparing these financial statements, Council has made estimates and assumptions valuations. concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are Creditors and other payables based on historical experience and other factors, including expectations or future Short-term creditors and other payables are recorded at their face value. events that are believed to be reasonable under the circumstances. The estimates and Critical judgements in applying Council’s accounting policies assumptions that have a significant risk of causing a material adjustment to the carrying Management has exercised the following critical judgements in applying accounting amounts of assets and liabilities within the next financial year are discussed below: policies for the year ended 30 June 2020: Landfill aftercare provision Classification of property Note 24 discloses an analysis of the exposure of Council in relation to the estimates The Council owns a number of properties held to provide housing to pensioners. The surrounding the landfill aftercare provision. receipt of market-based rental from these properties is incidental to holding them. The Infrastructural assets properties are held for service delivery objectives as part of the Council's social housing There are a number of assumptions and estimates used when performing depreciated policy. The properties are therefore accounted for as property, plant and equipment. replacement cost valuations over infrastructural assets. These include: See Note 12. Foreign currency transactions • The physical deterioration and condition of an asset, for example the Council could be carrying an asset at an amount that does not reflect its actual condition. This is Foreign currency transactions (including those for which forward foreign exchange particularly so for those assets which are not visible, for example storm water, contracts are held) are translated into the functional currency using the exchange rates wastewater and water supply pipes which are underground. This risk is minimised prevailing at the dates of the transactions. Foreign exchange gains and losses resulting by Council performing a combination of physical inspections and condition from the settlement of such transactions and from the translation at year end exchange modelling assessments of underground assets; rates of monetary assets and liabilities denominated in foreign currencies are recognised in the surplus or deficit. See Note 25. • Estimating any obsolescence or surplus capacity of an asset; and Other investments

The carrying amount of term deposits approximates their fair value. See Note 11(b).

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COVID-19 FIXED ASSETS Property, Plant & Equipment Hastings District Council has considered the potential impact of COVID-19 as part of its COVID-19 impact has introduced increased uncertainty in the valuation of these impairment testing of assets on its statement of financial position. assets. However, Council is of the opinion that there is no significant adverse impact arising from COVID-19. It is acknowledged that there is significant uncertainty in how COVID-19 will impact the Water Infrastructure Assets New Zealand economy and Hastings District Council in the future. The table below Water, Wastewater and Stormwater have been valued at Optimised Depreciated provides an assessment of the impact of the impact of COVID-19 on Council assets. This replacement cost as at 30 June 2020. Below ground assets have been valued by assessment is effective as at the end of June 2020 and has made use of all available Council's engineers and independently reviewed by Waugh Infrastructure, whose information at that time. letter indicated that COVID-19 is unlikely to lead to any reduction in demand for Council's assets. ASSET COVID-19 Assessment Roading Infrastructure Assets CASH AT BANK No impact to carrying value. All cash and term deposits held at banks with credit Due to the current global COVID-19 pandemic, it is emphasised that there is a ratings of A or better. heightened uncertainty with regards to predicting future changes in asset values. DEBTORS No impairment is required for rates receivables due to the powers under the Local The indices used to forecast future costs have been estimated using trends based AND OTHER Government (Rating) Act 2002 to recover outstanding rates debts. Other on data captured from previous periods. This fair value assessment has been RECEIVABLES receivables have been assessed for impairment and there is no significant impact conducted before the true full impact of COVID-19 is known. There is therefore a from COVID-19 on collectability. risk that infrastructure costs may fluctuate as a result of the impact of COVID-19 on the economy. INVENTORIES No impact on carrying value. While this is the case, it is expected that the impact of Covid-19 will be minimal on OTHER FINANCIAL All financial assets that are current are hold with banks with Standard and Poors horizontal assets. It is, therefore, expected that the level of risk when assessing the ASSETS credit ratings of A or better. valuation of roading infrastructure assets is low. It is possible that replacement cost rates may be subject to short-term changes due to shortages of materials or Non-Current financial assets include investments in associates, including Hawke’s specialist labour. However, the replacement costs that are used in depreciated Bay Airport. Council has a 24% interest in Hawke’s Bay Airport which has been replacement cost calculations should reflect typical and sustainable market severely affected by COVID-19 restrictions. This is reflected in the significant conditions. Beca are, therefore, comfortable that the fair value assessment noted decline in its value accounted for using the equity method. Subsequent to year below is a reasonable estimate of the roading infrastructure asset values. end, an additional loan was provided by the shareholders to support the continuity of the airport's expansion. Refer to Note 26 for more details on the loan. The Land & Buildings ability of Hawke’s Bay Airport to be able to continue as a going concern for the Property transactions in Hawke’s Bay since New Zealand went into lockdown on 25 next twelve months from the date of this report is largely dependent on the March 2020 were subdued until May but are now showing resumed support rather viability of its forecasted revenue and growth post- COVID-19 as well as continues than the widely forecast decline. Some of this is catch up transactional activity, availability of funding from its lenders/shareholders. Refer to Note 11 for details while mortgage interest rates below 3% and looking to stay low for longer are on impairment considerations. providing plenty of encouragement to home buyers, despite economic In addition are unlisted shares which relate to an entity owned by local commentators suggesting tougher times still ahead. We remain slightly cautious government. Due to its low carrying value at year end, there is minimal risk for the coming 12 month period, including any election uncertainty. However, it exposure from all factors including COVID-19. may eventuate that Hawke’s Bay is less impacted by the border controls and our strong farming and horticultural economy serves to better insulate the region INTANGIBLE Council continues to use its intangible assets (computer software) to the fullest compared to other parts of New Zealand. ASSETS extent possible and as such there are no indicators of impairment as a result of In general terms, the non-residential market in Hastings District is more cautious COVID-19. than was the occurring in June 2018 and June 2019. There is no evidence however BIOLOGICAL Council has two small blocks of forestry assets. There has been no impact on these of prices being at lower levels compared to 2018. Rural properties of all sizes and ASSETS assets as a result of COVID-19 as these holdings will not be harvested in the short farming types are continuing to attract very strong prices. to medium term and are also well under the level of materiality required.

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2. Funding impact statement for the whole of Council as at 30 June 2020

Budget Council Actual Council Budget Council Actual Council 2019 2019 2020 2020 Variance Notes $'000 $'000 $'000 $'000 $'000

SOURCES OF OPERATING FUNDING Reconciliation of statement of comprehensive revenue General rates, uniform annual general charge, rates penalties 59,846 59,431 62,123 61,712 (411) and expense to funding impact statement for the whole

Targeted rates 17,542 17,916 20,042 20,102 60 of Council for the year ended 30 June 2020

Subsidies and grants for operating purposes 5,938 7,716 6,539 6,615 76 Total revenue from statement of 142,477

Fees and charges 22,925 26,105 24,439 27,897 3,458 comprehensive revenue and expense

Interest and dividends from investments 126 693 126 604 478 Less total funding from funding 117,769

Local authorities fuel tax, fines, infringement fees and other receipts 804 940 920 839 (81) impact statement

Total operating funding (A) 107,181 112,801 114,188 117,769 3,580 Variance 24,708 APPLICATIONS OF OPERATING FUNDING Variance is made up of: Payments to staff and suppliers 76,389 81,472 81,088 86,015 (4,927)

Finance costs 5,621 4,836 6,833 5,147 1,686 Capital subsidies 15,246

Other operating funding applications 4,799 6,666 5,570 7,196 (1,627) Development and financial 4,281

Total applications of operating funding (B) 86,809 92,974 93,490 98,357 (4,867) contributions

Surplus (deficit) of operating funding (A-B) 20,372 19,827 20,699 19,411 (1,287) Vested infrastructural assets 5,098 SOURCES OF CAPITAL FUNDING Minor differences 83

Subsidies and grants for capital expenditure 10,764 12,579 9,829 15,246 5,417

Development and financial contributions 7,182 7,366 5,138 4,201 (937) Total operating expenditure from 141,244

statement of comprehensive revenue Increase (decrease) in debt 44,392 26,137 36,401 31,193 (5,208)

Gross proceeds from sale of assets 419 2,070 422 786 364 Less total applications of funding from 98,357

funding impact statement Lump sum contributions 300 195 270 81 (189) Other dedicated capital funding - - - - - Variance 42,887 Total sources of capital funding (C) 63,057 48,347 52,059 51,506 (553) Variance is made up of: APPLICATIONS OF CAPITAL FUNDING Depreciation and amortisation 35,220 Capital expenditure

To meet additional demand 10,892 10,379 4,311 7,237 (2,926) Payments made to suppliers 2,700

To improve the level of service 38,270 25,432 30,682 28,111 2,571 Finance costs 4,967 To replace existing assets 35,270 34,134 37,382 40,945 (3,563)

Increase (decrease) in reserves (2,000) (2,125) - (5,342) 5,342

Increase (decrease) of investments 997 354 383 (33) 416

Total applications of capital funding (D) 83,429 68,174 72,758 70,918 1,840

Surplus (deficit) of capital funding (C-D) (20,372) (19,827) (20,699) (19,411) 1,277 Total funding balance (A-B) + (C-D) - - - - - Group depreciation and amortisation 31,338 34,085 32,150 34,944 (2,794)

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3. Rates revenue excluding metered water supply charges

Actual Council Budget Council Actual Council 2019 2020 2020 $'000 $'000 $'000 42,192 General Rate 44,472 44,144 10,728 Community & Resource Rate 11,629 11,623 6,447 Uniform Annual General Charge 6,035 6,009 TARGETED RATES 52 Havelock North Business Association 53 53 123 Swimming Pools 139 129 123 Havelock North Parking 123 125 287 Hastings City Marketing 289 289 310 Security Patrols 306 306 213 CBD Hastings 244 244 51 CBD Havelock North 58 58 - Rural Seal Extension - - - Whakatu Stormwater - - 16 Waimarama Seawall 16 16 5,458 Wastewater 5,876 5,514 25 Waipatiki Wastewater Operational 34 25 5 Waipatiki Wastewater Capital - 1 1,965 Wastewater Levy (80%) 1,384 1,877 8,041 Water supply 11,187 10,210 846 Kerbside Recycling 1,100 851 381 Refuse Collection 605 384 - Waimarama Refuse Collection 20 - 21 Whirinaki Water Supply – Capital - 21 63 Change in Targeted Rates Reserve (2,019) (65)

77,347 81,553 81,814

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 93

The Council is required by the LGFA Guarantee and Indemnity Deed to disclose in its 6. Operational costs financial statements (or notes) its annual rates revenue. That Deed defines annual rates revenue as an amount equal to the total revenue from any funding mechanism Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 authorised by the Local Government (Rating Act) 2002 together with any revenue $'000 $'000 $'000 $'000 received by the Council from other local authorities for services provided by that 917 917 Councillors remuneration 986 986 Council for which those other Local Authorities rate. The annual rates revenue of the 27,829 27,887 Contractors 30,728 30,728 Council for the year ended 30 June 2020 for the purposes of the LGFA Guarantee and Indemnity Deed disclosure is shown below: 4,796 4,804 Consultants and legal fees 4,723 4,723 Actual Council Budget Council Actual Council 219 219 Operating lease expense 244 244 2019 2020 2020 113 118 Fees to Audit New Zealand for audit 105 111 $'000 $’000 $'000 of financial statements 77,347 Rates excluding metered water supply charges 81,553 81,814 4 4 Fees to Audit New Zealand for other 6 6 965 Metered Water Supply Charges 613 1,266 services (Debenture Trust Deed 78,312 82,165 83,080 audit)*

4. Finance revenue 11 11 Total bad debts written off 97 97 (2) (2) Change in provision for doubtful debts (10) (10) Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 1,831 1,831 Loss on sale of property, plant and 2,788 2,788 $'000 $'000 $'000 $'000 equipment 177 177 Special Fund Investment 109 109 6,403 6,403 Maintenance and asset costs 6,184 6,184 534 541 Other Investments 478 489 2,850 2,850 Energy costs 2,968 2,968 710 718 587 598 32,875 32,884 Salary and wages 34,426 34,426 (177) (177) Less Interest on internal borrowings (109) (109) 1,044 1,044 Defined contribution plan – employer 1,129 1,129 534 541 478 489 contributions

5. Other revenue 97 97 Increase/(decrease) in employee 645 645 entitlements/liabilities Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 1,277 1,295 Administration costs 1,298 1,298 $'000 $'000 $'000 $'000 4,408 4,148 Sponsorships and grants 2,645 2,645 558 558 Petrol tax 538 538 5,029 5,036 Other costs 7,151 7,905 436 436 Property, plant and equipment gains 83 83 on disposals 60 60 Impairment loss non fixed asset - - - - Unrealised gain on interest rate - - 89,763 89,607 96,113 96,873 swaps * Prior year result includes audit fee for Long-Term Plan audit. - 368 Other Revenue - 529 159 159 Dividends revenue 126 126

1,154 1,521 746 1,276

94 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

7. Depreciation and amortisation expense 8. Taxation Actual Council Actual Group Actual Council Actual Group Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 2019 2019 2020 2020 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 908 1,237 Operational buildings 979 1,309 2,569 3,387 Net operating surplus before taxation 1,232 1,054 1,331 1,331 Restricted buildings 1,408 1,408 - (107) Share of associate's retained surplus - 214

194 194 Library collection 216 216 2,569 3,280 1,232 1,267 719 918 Tax at 28% 345 355 873 1,081 Plant, equipment and motor vehicles 714 929 PLUS (LESS) TAX EFFECT OF: - - 97 99 Furniture and fittings 109 112 (719) (918) Permanent differences (345) (355) 847 847 Landfill 878 878 - - Imputation credits - - 902 902 Computers and office equipment 983 983 - - Residual taxation payable - -

5,152 5,691 Total property, plant and equipment 5,287 5,835 COMPRISING: 2,582 2,582 Water supply network 2,753 2,753 - - Current tax - - 7,015 7,015 Wastewater disposal network 7,029 7,029 - - Future income tax benefit - -

FUTURE TAX BENEFIT: 3,714 3,714 Stormwater disposal network 3,756 3,756 - - Opening balance - - 13,995 13,995 Roading foundations and bridges 13,943 13,943 - - Movement - - 1,471 1,471 Parks 1,948 1,948 - - Closing balance - - 28,777 28,777 Total Infrastructural assets 29,429 29,428 AMORTISATION The following entities unused tax losses are available to carry forward and offset against 156 156 Intangible assets – computer software 228 228 future taxable income: 34,085 34,624 34,944 35,491 Unused Tax Losses

Hastings District Holdings Limited $839,898 (2019: $843,518)

Hastings District Properties Limited $129,629 (2019: $129,629)

Hawke’s Bay Opera House Limited $86,911 (2019: $86,911)

Hastings District Council $830,718 (2019: $601,680)

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 95

9. Receivables Ratepayers can apply for payment plan options in special circumstances. Where such repayment plans are in place, debts are discounted to their present value of future Actual Council Actual Group Actual Council Actual Group payments if the impact of discounting is material. 2019 2019 2020 2020 $'000 $'000 $'000 $'000 The ageing profile of receivables at year end is detailed below: 507 507 Rates receivables 2,098 2,098 Council Gross Impairment Gross Impairment 2019 2019 The status of receivables are 2020 2020 9,928 10,273 Other receivables 8,900 9,358 $'000 $'000 detailed below: $'000 $'000 2,141 2,141 GST receivables 2,332 2,332 DEBTORS

116 116 Other current assets 138 138 11,572 - Not past due 11,841 473 - Past due 1-60 days 695 12,692 13,037 13,468 13,926 18 - Past due 61-90 days 186 (237) (237) Less Impairment of receivables (227) (227) 629 (237) Past due > 90 days 746 (227) 12,455 12,801 13,241 13,699 12,692 (237) 13,468 (227) There are no material exchange transactions Group Gross Impairment Gross Impairment

2019 2019 The status of receivables are 2020 2020 Fair value $'000 $'000 detailed below: $'000 $'000 DEBTORS Debtors and other receivables are non-interest bearing and receipt is normally on 11,918 Not past due 12,299 30-day terms, therefore the carrying value of debtors and other receivables approximates their fair value. 473 Past due 1-60 days 695

Related parties 18 Past due 61-90 days 186 At the end of the financial year, Hawke's Bay Regional Sports Park Trust, a related party 629 (237) Past due > 90 days 746 (227) owed the Council $40,895 (2019: $nil). 13,038 (237) 13,926 (227) Impairment All receipts greater than 30 days in age are considered to be past due. The Council does not provide for any impairment on rates receivable, with the exception of Maori land arrears, as it has various powers under the Local Government (Rating) Act 2002 to recover any outstanding debts. These powers allow the Council to commence legal proceedings to recover any rates that remain unpaid four (4) months after the due date for payment. If payment has not been made within three (3) months of the Court’s judgment, then the Council can apply to the Registrar of the High Court to have the judgment enforced by sale or lease of the rating unit.

96 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

The impairment provision has been calculated based on a review of specific overdue Movements in the provision for impairment of receivables are as follows: receivables and a collective assessment. The collective impairment provision is based on Actual Council Actual Group Actual Council Actual Group an analysis of past collection history and debt write-offs. 2019 2019 2020 2020 $'000 $'000 $'000 $'000 Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 239 239 As at 1 July 237 237 $'000 $'000 $'000 $'000 - - Additional provisions made during - - 71 71 Individual Impairment 66 66 the year

166 166 Collective Impairment 161 161 (2) (2) Provisions reversed during the year - -

237 237 227 227 - - Receivables written-off during the - - year

Individually impaired receivables have been determined to be impaired because of the 237 237 237 237 significant financial difficulties being experienced by the debtor. An analysis of these individually impaired debtors is as follows: 10. Inventory Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 Actual Council Actual Group Actual Council Actual Group $'000 $'000 $'000 $'000 2019 2019 2020 2020 $'000 $'000 $'000 $'000 - - Past due 1-60 days - - 55 55 Inventory held for distribution 106 106 - - Past due 61-90 days - - 55 55 Total inventory 106 106 71 71 Past due > 90 days 66 66

71 71 66 66 No inventories are pledged as security for liabilities (2019: $nil).

The carrying amount of inventory held for distribution that is measured at current replacement cost as at 30 June 2020 amounted to $nil (2019: $nil).

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 97

11.(a) Investment in associates Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 $'000 $'000 $'000 $'000 1,063 9,270 Hawke's Bay Airport Limited 1,063 7,858 The summary financial information for associates only - 24 Horse of the Year (Hawke's Bay) Limited - 54 shows the Group’s interest. 684 - Omarunui LFG Generation Limited Partnership - - 1,747 9,294 Total investments in associates 1,063 7,912 HAWKE'S BAY AIRPORT LIMITED Name of entity: Hawke's Bay Airport Limited

Principal activities: Airport Ownership: 24% (2019: 24%) Owner: Hawke's Bay Airport Limited Balance date: 30 June Movements in the carrying amount of investments in associate 1,063 Hastings District Council Investment in Hawke’s Bay Airport Limited 1,063

6,172 Retained Earnings at the beginning of year 7,122

7,235 Carrying amount at beginning of year 8,185

Council’s share of the results of Hawke’s Bay Airport Limited

359 Share of Surplus (243)

- Share of other recognised revenues and expenses - 359 Share of total recognised revenues and expenses (243) Carrying Amount of Investment in Hawke’s Bay Airport Limited 7,238 Carrying amount at beginning of year 8,185

359 Share of total recognised revenues and expenses (243)

(59) Revaluation reserves (84)

647 Prior year adjustment -

8,185 Carrying amount at end of year 7,858

There are no contingent liabilities at 30 June 2020 Summarised Financial Information 292 Current Assets 247

12,407 Non-Current Assets 13,802 838 Current Liabilities 4,711

3,905 Non-Current Liabilities 1,364 1,845 Revenues 1,506 (182) Tax Expense (8) 359 Surplus/(deficit) (243) 24% Group's interest 24% HORSE OF THE YEAR (HAWKE'S BAY) LIMITED Name of Entity: Horse of the Year (Hawke’s Bay) Limited

Principal activities: Equestrian Show

Ownership: 33% (2019: 33%)

Owner: Horse of the Year (Hawke’s Bay) Limited

Balance date: 31 May

98 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

11.(a) Investment in associates Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 $'000 $'000 $'000 $'000 Movements in the carrying amount of investments in associate The summary financial information for associates only - Hastings District Council Investment in Horse of the Year (Hawke’s Bay) Limited - shows the Group’s interest. 16 Retained earnings at the beginning of year 24 16 Carrying amount at beginning of year 24 Council’s share of the results of Horse of the Year (Hawke’s Bay) Limited 9 Share of Surplus 29 - Share of other recognised revenues and expenses -

9 Share of total recognised revenues and expenses 29

Carrying Amount of Investment in Horse of the Year (Hawke’s Bay) Limited

16 Carrying amount at beginning of year 24 9 Share of total recognised revenues and expenses 29 - Revaluation reserves - 24 Carrying amount at end of year 54 There are no contingent liabilities at 30 June 2019 Summarised Financial Information 46 Current Assets 63 9 Non-Current Assets 7 31 Current Liabilities 17 - Non-Current Liabilities - 815 Revenues 865 - Tax Expense (exempt) - 9 Surplus/(deficit) 29 33% Group’s interest 33% OMARUNUI LFG GENERATION LIMITED PARTNERSHIP Name of Entity: Omarunui LFG Generation Limited Partnership

Principal Activities: Gas & Electricity

Ownership: 0% (2019: 40%) Owner: Omarunui LFG Generation Limited Partnership Balance date: 31 March 2020* *Note that this partnership has sold off the energy plant and is no longer operating with settlement agreed prior to the end of the financial year. 774 Hastings District Council Investment in Omarunui LFG Generation Limited Partnership

(220) Retained earnings at the beginning of year 524 Carrying amount at beginning of year 402 Council’s share of the results of Omarunui LFG Generation Limited Partnership (62) Share of surplus - - Share of other recognised revenues and expenses -

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 99

11.(a) Investment in associates Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 $'000 $'000 $'000 $'000 (62) Share of total recognised revenues and expenses - The summary financial information for associates only Carrying amount of investment in Omarunui LFG Generation Limited Partnership shows the Group’s interest. 524 Carrying amount at beginning of year 402 (62) Share of total recognised revenues and expenses - (60) Impairment - 402 Carrying amount at end of year - 439 Assets - 37 Liabilities 121 Revenues (122) Surplus/(deficit) 40% Group's interest 0%

11.(b) Other financial assets Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020

$'000 $'000 $'000 $'000 CURRENT PORTION

31 330 Term deposits 14,180 14,607 31 330 Total current portion 14,180 14,607 NON-CURRENT PORTION Investment in CCOs and similar entities - - HB LASS Limited - - 16 - Subsidiary Hastings District Holdings Limited 15 - 16 - Total Investment in CCOs and similar entities 15 - Investment in other entities - - Term deposits - - 615 615 Unlisted shares in LGFA 615 615 1,688 1,688 Borrower notes in LGFA 2,400 2.400 157 157 New Zealand Local Government Insurance Association 157 157 2,460 2,460 Total investment in other entities 3,172 3,172 2,476 2,460 Total non-current portion 3,188 3,172 2,507 2,790 Total other financial assets 17,368 17,779

100 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

Fair value Term deposits The carrying amount of term deposits approximates their fair value. Unlisted shares and borrower notes The fair value of the unlisted shares has been determined as follows: • If an active market is present for unlisted shares, the fair value of such shares is determined by their market value. • If an active market is absent for unlisted shares, the fair value of such shares is determined by their redemption value. Impairment At balance date, the subsidiary Hastings District Holdings was impaired as follows: Actual Actual 2019 2020

$'000 Impairment $'000 318 Subsidiaries 317 (302) Impairment loss (302) 16 Subsidiary Hastings District Holdings Limited 15

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 101

12. Property, plant and equipment: 2020

1 Jul 2019 1 Jul 2019 1 Jul 2019 30 Jun 2020 30 Jun 2020 30 Jun 2020

Revaluation Accumulated depreciation impairment and charges Carrying amount Additions Disposals Impairment charges Amortisation charges Depreciation Revaluation Depreciation back write Revaluation/ Other Movements Cost/ Revaluation Accumulated depreciation impairment and charges Carrying amount $'000 Cost/ COUNCIL OPERATIONAL ASSETS Operational Buildings 42,177 (905) 41,272 1,373 - - - (979) 12 (5,842) 37,708 (1,872) 35,836 Operational Land 38,493 - 38,493 (5) (267) - - - - (450) 37,771 - 37,771 Heritage 521 - 521 ------521 - 521 Library Books 2,035 - 2,035 310 - - - (216) 216 (346) 1,998 - 1,998 Computers & Office Equipment 10,820 (7,583) 3,237 958 (29) - - (983) (7) - 11,749 (8,573) 3,176 Furniture & Fittings 2,808 (2,092) 715 239 - - - (109) - - 3,047 (2,200) 846 Plant, Equipment & Vehicles 11,916 (6,436) 5,479 3,060 (873) - - (714) 547 - 14,103 (6,602) 7,500 Landfill 21,314 (15,792) 5,522 1,195 - - - (878) - - 22,509 (16,670) 5,839 Total Operational Assets 130,085 (32,808) 97,275 7,129 (1,169) - - (3,880) 769 (6,638) 129,407 (35,919) 93,487 COUNCIL RESTRICTED ASSETS Restricted Buildings 64,045 (1,351) 62,693 10,796 (401) - - (1,408) 20 1,885 76,324 (2,740) 73,585 Restricted Land 77,655 - 77,655 987 - - - - - 5,123 83,765 - 83,765 Total Restricted Assets 141,700 (1,351) 140,348 11,783 (401) - - (1,408) 20 7,008 160,089 (2,740) 157,350 Total Operational & Restricted Assets 271,784 (34,160) 237,623 18,912 (1,570) - - (5,287) 789 370 289,496 (38,658) 250,837 SUBSIDIARIES PROPERTY, PLANT AND EQUIPMENT Plant & Equipment 4,033 (1,535) 2,498 13 - - - (212) - - 4,047 (1,747) 2,300 Restricted Buildings 15,811 (2,621) 13,199 2,007 - - - (330) - - 17,817 (2,951) 14,866 Restricted Land 130 - 130 ------130 - 130 Office Equipment 28 (28) ------28 (28) - Total Subsidiary Assets 20,002 (4,185) 15,827 2,020 - - - (541) - - 22,022 (4,726) 17,296 Total Group 291,786 (38,345) 253,449 20,932 (1,570) - - (5,828) 789 370 311,518 (43,384) 268,133 BIOLOGICAL ASSETS Landfill Forestry 60 - 60 ------60 - 60 Total Biological Assets 60 - 60 ------60 - 60 INTANGIBLE ASSETS Computer Software 5,369 (5,214) 155 367 - - (228) - - 5,737 (5,442) 294 Total Intangible Assets 5,369 (5,214) 155 367 - - (228) - - 5,737 (5,442) 294 COUNCIL INFRASTRUCTURAL ASSETS Bridges 72,331 - 72,331 1,852 - - (1,329) - - 74,183 (1,329) 72,854 Roading – Land 129,124 - 129,124 ------129,124 - 129,124 Roading – Other 1,083,285 - 1,083,285 22,766 - - (12,614) - (624) 1,105,427 (12,614) 1,092,813 Stormwater Disposal Network 228,801 (3,714) 225,087 2,921 (72) - (3,756) 7,470 2,535 234,185 - 234,185 Wastewater Disposal Network 264,566 (7,015) 257,551 12,407 (1,687) - (7,029) 14,044 745 276,031 - 276,031 Water Supply Network 146,056 (2,582) 143,474 17,755 (565) - (2,753) 5,335 3,999 167,245 - 167,245 Parks 44,209 - 44,208 4,492 - - (1,948) - - 48,701 (1,948) 46,753 Total Infrastructural Assets 1,968,372 (13,311) 1,955,061 62,193 (2,324) - (29,429) 26,848 6,655 2,034,895 (15,891) 2,019,005

102 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

Impairment of Heretaunga House Capitalised finance leases Recently Council undertook an exercise to update the existing seismic assessment The net carrying amount of plant and equipment held under finance leases is performed on Heretaunga House in 2011 ahead of commencing a $1.9m upgrade $nil (2019: $nil). There is no class of the Property, Plant or Equipment that has been programme on the building. This was seen as a pragmatic step in planning for the work pledged as security for liabilities. due to the evolving understanding of building seismic performance following the Work in progress Christchurch and Kaikoura earthquakes. Unexpectedly, the Detailed Seismic Assessment The total amount per class is as listed below: performed by WSP and peer reviewed by Spencer Holmes LTD (both experts in Actual Council earthquake engineering) has found that there is a problem with the building that needs Class 2020 to be fixed. Due to this finding the building is no longer being used to house Council Buildings 7,552 officers or to be leased out. Computers & Office Equipment 528 Council is awaiting further engineering advice which will provide information into how Furniture & Fittings - much it will cost to rectify and how long it will take to complete. There are a number of Plant, Equipment & Vehicles 23 questions to answer when reviewing the level of impairment needed. Properties sold but not settled - Can the building be used in the way it was intended for tenants? Parks - Are there any indicators of physical damage? Roading - Is it likely to take longer than a year to go through the process collating reports, and Stormwater 6,713 then repairing or rebuilding? Wastewater 17,196 When these questions were considered, due to the fact no revenue can be earned in Water Supply 33,343 the foreseeable future, along with the building not to be used by Council officers and Total 65,355

the time it will take to repair or rebuild, the decision was made to impair this asset in Assets Assets Closing Replacement terms of the building back to zero. The impairment has been taken through to the asset 2020 core assets constructed transferred value cost reserve. WATER SUPPLY Property, Plant & Equipment consists of: Treatment Plants and Facilities 6,876 - 7,029 9,623 • Operational assets – these include land, buildings, landfill, library books, plant, Other Assets 9,791 1087 160,216 219,323 equipment and motor vehicles. Total 16,668 1087 167,245 228,945 SEWERAGE • Restricted assets – restricted assets are parks and reserves, sportsgrounds, theatre Treatment Plants and Facilities 1,127 - 46,414 85,205 and historical buildings owned by Council which provide a benefit or service to the community and cannot be disposed because of legal or other restrictions; Not all Other Assets 10,587 693 229,617 421,521 restricted assets have legislative impediments to disposal. Total 11,714 693 276,031 506,726 Stormwater drainage 2,330 591 234,185 374,312 • Infrastructure assets – infrastructure assets are the fixed utility systems owned by Council. Each asset class includes all items that are required for the network to Flood protection and control works - - - - function, for example sewer reticulation includes reticulation piping and sewer ROADING pump stations. Roads & Footpaths 19,361 3,405 1,294,791 1,472,783

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 103

12. Property, plant and equipment: 2019

1 Jul 2018 1 Jul 2018 1 Jul 2018 30 Jun 2019 30 Jun 2019 30 Jun 2019

Revaluation Accumulated depreciation impairment and charges Carrying amount Additions Disposals Impairment charges Amortisation charges Depreciation Revaluation Depreciation back write Revaluation Cost/ Revaluation Accumulated depreciation impairment and charges Carrying amount $'000 Cost/ COUNCIL OPERATIONAL ASSETS Operational Buildings 39,372 - 39,372 3,143 (338) - - (908) 3 - 42,177 (905) 41,272 Operational Land 37,815 - 37,815 1,828 (1,150) - - - - - 38,493 - 38,493 Heritage 521 - 521 ------521 - 521 Library Books 1,830 - 1,830 368 - - - (194) 194 (163) 2,035 - 2,035 Computers & Office Equipment 9,912 (6,975) 2,936 1,217 (309) - - (902) 294 - 10,820 (7,583) 3,237 Furniture & Fittings 2,738 (2,079) 660 163 (93) - - (97) 82 - 2,808 (2,092) 715 Plant, Equipment & Vehicles 16,634 (10,040) 6,594 1,434 (6,153) - - (873) 4,478 - 11,916 (6,436) 5,479 Landfill 20,674 (14,945) 5,729 640 - - - (847) - - 21,314 (15,792) 5,522 Total operational assets 129,497 (34,039) 95,458 8,793 (8,042) - - (3,821) 5,050 (163) 130,085 (32,809) 97,275 COUNCIL RESTRICTED ASSETS Restricted Buildings 54,107 - 54,107 9,937 - - - (1,331) (20) - 64,045 (1,351) 62,693 Restricted Land 77,655 - 77,655 ------77,655 - 77,655 Total Restricted Assets 131,762 - 131,762 9,937 - - - (1,331) (20) - 141,700 (1,351) 140,348 Total Operational & Restricted Assets 261,259 (34,039) 227,220 18,730 (8,042) - - (5,152) 5,030 (163) 271,784 (34,160) 237,623 SUBSIDIARIES PROPERTY, PLANT AND EQUIPMENT Plant & Equipment 4,047 (1,320) 35 7 (20) - - (220) 5 - 4,033 (1,535) 2,498 Restricted Buildings 15,447 (2,302) 191 369 - - - (319) - - 15,811 (2,621) 13,199 Restricted Land 130 - 130 ------130 - 130 Office Equipment 32 (31) - - (4) - - - 4 - 28 (28) Total Subsidiary Assets 19,655 (3,653) 356 375 (24) - - (539) 9 - 20,002 (4,185) 15,827 Total Group 280,914 (37,693) 227,575 19,105 (8,066) - - (5,691) 5,039 (163) 291,786 (38,345) 253,449 BIOLOGICAL ASSETS Landfill Forestry 19 - 19 40 ------60 - 60 Total Biological Assets 19 - 19 40 ------60 - 60 INTANGIBLE ASSETS Computer Software 5,186 (5,058) 127 183 - - - (156) - - 5,369 (5,214) 155 Total Intangible Assets 5,186 (5,058) 127 183 - - - (156) - - 5,369 (5,214) 155 COUNCIL INFRASTRUCTURAL ASSETS Bridges 63,438 (1,157) 62,281 - - - - (1,154) 2,312 8,893 72,331 - 72,331 Roading – Land 129,015 - 129,015 109 ------129,124 - 129,124 Roading – Other 1,064,523 (12,392) 1,052,132 26,743 - - - (12,841) 25,232 (7,981) 1,083,285 - 1,083,285 Stormwater Disposal Network 222,309 - 222,309 2,547 (105) - - (3,714) - 4,050 228,801 (3,714) 225,087 Wastewater Disposal Network 258,252 - 258,252 6,562 (247) - - (7,015) - - 264,566 (7,015) 257,551 Water Supply Network 129,474 - 129,474 16,828 (246) - - (2,582) - - 146,056 (2,582) 143,474 Parks 33,487 (1,377) 32,110 3,526 - - - (1,471) 2,848 7,195 44,209 - 44,208 Total Infrastructural Assets 1,900,498 (14,926) 1,885,573 56,315 (598) - - (28,777) 30,392 12,156 1,968,372 (13,311) 1,955,062

104 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

Historical movements in fair value and impairment for Land and Buildings 2012 revaluation loss to 2014 impairment of Opera House 2012 revaluation statement of comprehensive to statement of comprehensive Reversal of revaluation Revaluation and impairment 2018 reversal of revaluation Balance of loss to reserves revenue and expense revenue and expense and impairment losses losses yet to be reversed and impairment losses impairment Class $'000 $'000 $'000 $'000 $'000 $'000 $'000 Land and Buildings 77 3,650 5,968 9,094 524 524 -

Impairment Land and buildings – impairment losses of $5,968,000 were recognised in the statement of comprehensive revenue and expense in the 2014 financial year, as an expense. These losses were due to the recognition of the impairment in value of the Hawke's Bay Opera House and the Municipal Building, Hastings Street South due to their seismic limitations. Due to an upward movement in the revaluation reserve of Land and Buildings in the 2015 year, this impairment has been reversed and offset against the revaluation reserve. The remaining impairment of $524,000 has been reversed and offset against the revaluation reserve due to an upward movement in Land and Buildings valuations in the 2018 year.

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 105

Property, Plant & Equipment consists of: 13. Payables and deferred revenue • Operational assets – these include land, buildings, landfill, library books, plant, Actual Council Actual Group Actual Council Actual Group equipment and motor vehicles. 2019 2019 2020 2020 $'000 $'000 $'000 $'000 • Restricted assets – restricted assets are parks and reserves, sportsgrounds, theatre and historical buildings owned by Council which provide a benefit or service to the CURRENT community and cannot be disposed because of legal or other restrictions; Not all 18,646 19,057 Trade payables and accrued expenses 16,548 17,396 restricted assets have legislative impediments to disposal. 706 706 Interest on public debt 687 687 • Infrastructure assets – infrastructure assets are the fixed utility systems owned by 212 212 Revenue received in advance 1,352 1,352 Council. Each asset class includes all items that are required for the network to 453 453 ETS Levy Provision (Note 24) 912 912 function, for example sewer reticulation includes reticulation piping and sewer 3,561 3,561 Other current liabilities 4,210 4,210 pump stations. 23,578 23,989 23,710 24,558

Capitalised finance leases NON-CURRENT The net carrying amount of plant and equipment held under finance leases is 541 722 Provision for Landfill Aftercare (Note 24) 1,319 1,319 $nil (2017: $nil). There is no class of the Property, Plant or Equipment that has been 258 258 Other non-current liabilities 321 453 pledged as security for liabilities. 800 981 1,640 1,772

Work in progress Payables and deferred revenue The total amount per class is as listed below: comprise of: Actual Council 212 212 Payables from non-exchange 1,352 1,352 Class 2019 transactions – rates and dog registrations Buildings 17,085 24,378 24,554 Payables from exchange transactions – 23,998 24,978 Computers & Office Equipment 408 commercial payables

Furniture & Fittings 43 Creditors and other payables are non-interest bearing and are normally settled on Plant, Equipment & Vehicles 21 30-day terms. Therefore, the carrying value of creditors and other payables Properties sold but not settled - approximates their fair value. Parks - Related parties Roading - • Stormwater 4,889 At the end of the financial year Hawke’s Bay Opera House Limited, a related party, was owed $nil (2019: $nil) by the Council. Wastewater 6,831 • At the end of the financial year Hastings District Properties Limited, a related party, Water Supply 22,568 was owed $nil (2019: $nil) by the Council. Total 51,844

106 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

14. Employee entitlements 15. Borrowings and other financial liabilities

Actual Council Actual Group Actual Council Actual Group Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 2019 2019 2020 2020 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 3,044 3,050 Opening balance 2,793 2,793 77,740 77,740 Opening total of external public debt 106,240 106,240 (251) (251) Entitlements paid or relinquished 939 965 50,500 50,500 Debt raised during year 56,575 56,575

2,793 2,799 3,731 3,758 (22,000) (22,000) Amounts repaid (10,000) (10,000) 2,444 2,450 Current 3,398 3,425 106,240 106,240 Total gross public debt 152,815 152,815

349 349 Non-current 333 333 Comprises

2,793 2,799 3,731 3,758 CURRENT 10,000 10,000 Secured loans 20,000 20,000 CURRENT - - Accrued pay 305 305 NON-CURRENT 96,240 96,240 Secured loans 132,815 132,815 2,353 2,353 Annual leave and other benefits 2,980 3,007 106,240 106,240 Total borrowings and other financial 152,815 152,815 91 91 Retirement and long service leave 112 112 liabilities

2,444 2,444 3,398 3,425

NON-CURRENT 349 349 Retirement and long service leave 333 333

349 349 333 333

The present value of retirement and long service leave obligations depends on a number of factors that are determined on an actuarial basis. Two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. Any changes in these assumptions will affect the carrying amount of the liability. Expected future payments are discounted using forward discount rates derived from the yield curve of New Zealand government bonds. The discount rates used have maturities that match, as closely as possible, the estimated future cash outflows. The salary inflation factor has been determined after considering historical salary inflation patterns. A weighted average discount rate of 6.0% (2019: 6.0%) and an inflation factor of 2.0% (2019: 2.0%) were used.

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Secured loans Summary of total public debt The Council's secured debt of $152.8 million (2019: $106.2 million) is mostly issued at The statement of financial position and Note 15 (above) records the total amount of floating rates of interest. For floating rate debt, the interest rate is reset quarterly based Council’s external debt as at 30 June 2020. on the 90-day bank bill rate plus a margin for credit risk. The overdraft is unsecured. The In addition to the external debt, the Council also utilises funds which are held for other maximum amount that can be drawn down against the overdraft facility is $0.5 million purposes (Council-created and restricted reserves) to reduce the amount of external (2019: $0.5 million). There are no restrictions on the use of the facility. The Council’s funding required. loans are secured over either separate or general rates of the Council. Actual Council Actual Group Actual Council Actual Group The Council has a multi-option credit facility of $10 million that has been drawn on. The 2019 2019 2020 2020 drawn-down balance as at 30 June 2020 was $2.082m. $'000 $'000 $'000 $'000 106,240 106,240 External secured loans 152,815 152,815 Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 41,587 41,587 Plus amount funded by 26,422 26,422 $'000 $'000 $'000 $'000 internal loans

REPAYMENT TERMS – TERM DEBT 147,827 147,827 Gross borrowings for activities 179,237 179,237 10,000 10,000 Payable in less than 1 year 20,000 20,000 20,000 20,000 Payable between 1 and 2 years 23,000 23,000 40,500 40,500 Payable between 2 and 5 years 68,075 68,075 35,740 35,740 Later than 5 years 41,740 41,740

106,240 106,240 152,815 152,815 3.68% 3.68% Weighted Average Interest Rate 3.68% 3.68% 4.07 4.07 Weighted Average Term (Years) 4.07 4.07

108 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

Internal borrowings Information about internal borrowings is provided below. Internal borrowings are eliminated on consolidation of activities in the Council's financial statements. 2019 2020 Prior year CR DR Carry 2020 closing balance Activity Group opening balance carry forwards transfer to Interest transfer from forward closing balance (16,826) Safe Healthy and Liveable Communities (16,826) (324) (3,419) (34) 6,689 238 (13,676)

(13,242) Governance and Support Services (13,242) (63) (1,312) (20) 1,893 - (12,744)

1,599 Economic and Community Development 1,599 (348) (32) (1) 353 187 1,759

(3,760) Roads and Footpaths (3,760) (702) (14,756) (13) 15,989 509 (2,732)

1,298 Stormwater Disposal 1,298 - (3,758) - 3,758 20 1,318

7,329 Wastewater Disposal 7,329 - (6,137) (8) 6,608 8 7,800

5,251 Water Supply 5,251 - (3,654) - 2,750 380 4,726

(23,236) Working Capital (23,236) - - - - - (12,872)

(41,587) Total (41,587) (1,436) (33,069) (76) 38,039 1,343 (26,422)

The fair values are based on cash flows discounted using a rate based on the average rates 4.07% (2019: 4.07%). The cash flow is working capital cash The carry forward column in the above table is the rating carry forward from rates collected in 2019/20 and carried forward to 2020/21.

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 109

16. Derivative financial instruments Interest rate swaps Actual Council Actual Group Actual Council Actual Group The notional principal amounts of the outstanding interest rate swap contracts for the 2019 2019 2020 2020 Council were $80.5 million (2019: $73.5 million) and for the Group were $80.5 million $'000 $'000 $'000 $'000 (2019: $73.5 million). At 30 June 2020, the fixed interest rates for the interest rate NON-CURRENT ASSET PORTION swaps varied from 2.8% to 5.9% (2019: 2.2% to 5.9%). - - Interest rate swaps – held for trading - - The notional principal amounts of the forward starting interest rate swap contracts for CURRENT LIABILITY PORTION the Council were $53.5 million (2019: $80.0 million) and for the Group were (2,186) (2,186) Interest rate swaps – held for trading (699) (699) $53.5 million (2019: $80.0 million). At 30 June 2020, the fixed interest rates for the NON-CURRENT LIABILITY PORTION interest rate swaps varied from 2.8% to 4.6% (2019: 2.8% to 4.8%). (11,380) (11,380) Interest rate swaps – held for trading (18,063) (18,063) Council manages its interest rate risk through the use of interest rate swaps. At the end (13,566) (13,566) (18,762) (18,762) of each financial year, Council revalues its interest rate swap portfolio to the current

market value. The movement in this valuation reflects what has happened to the floating interest rate during the year. As floating rates rise, the cost to Council to hold Fair value these interest rate swaps to maturity decreases, as floating rates fall, the Council’s cost The fair values of interest rate swaps have been determined by calculating the expected to maturity increases. During 2019/20, interest rates have been falling which has meant cash flows under the terms of the swaps and discounting these values to present value. the Council portfolio of interest rate swaps has become more expensive relative to the The inputs into the valuation model are from independently sourced market parameters floating rate. This year’s recognised but unrealised loss of ($5.196 million) on such as interest rate yield curves. Most market parameters are implied from instrument revaluation reflects this change in interest rates and essentially means that over the prices. next ten years, assuming interest rates remain at today’s lower rates for this entire period, Council would need to pay these additional interest costs.

110 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

17. Retained earnings It has been the practice of Council to use the general purpose reserves to either reduce debt or to reduce the rating requirement in subsequent years. This component of equity comprises the accumulated retained earnings and Emergency Funds Council-Created Reserves. Council has set aside funds to assist in the event of an emergency. Purposes for which Actual Council Actual Group Actual Council Actual Group funds are currently set aside are flood damage and rural fire. 2019 2019 2020 2020 $'000 $'000 $'000 $'000 Effluent Disposal 1,213,289 1,234,130 Balance at 1 July 1,215,860 1,237,927 Council operates an effluent disposal scheme together with major users. Each year, 2,240 3,387 Net surplus (deficit) for the year 1,232 1,054 funds are placed into a reserve for the maintenance of the scheme with funds

1,215,529 1,237,517 1,217,092 1,238,980 withdrawn to fund major works.

ADD/(LESS) NET APPROPRIATIONS Sundry Reserves OF NET SURPLUS This represents a number of other reserves set aside for various purposes. 407 486 (To) from council created reserves 5,198 5,201 Separate Rates Reserves (76) (76) (To) from restricted reserves (286) (286) This represents the balance of funds collected from various targeted rates which have 1,215,860 1,237,927 Balance at 30 June 1,222,004 1,243,895 not yet been spent. 1,215,860 1,237,927 Accumulated surplus 1,222,004 1,243,895 Other 22,982 22,982 Council created reserves 17,784 17,784 This represents reserves to be used for the Leachate Treatment Disposal System project. 1,238,842 1,260,909 Total accumulated funds 1,239,788 1,261,679 The balances of Council-created reserves are: Prior year balances may differ from 2018/19 Annual Report, these have been restated to match the correct closing position. Balance Balance 2019 Activity Deposits Interest Withdrawals 2020 a) Council-created reserves $'000 Group $'000 $'000 $'000 $'000 The Council has created a number of reserves, commonly referred to as special funds, 5,404 All activities Plant, equipment and 1,505 44 (2,456) 4,497 vehicle replacement fund to set aside funds for various purposes (e.g. asset replacements, emergency funds, etc.). 8,403 All activities Property maintenance (984) 27 (1,348) 6,097 The Council sets aside and invests funds for these reserves with any interest earned on and improvements the investments being credited to the reserves. 5,521 All activities General purpose reserves 2,256 - (1,889) 5,887 The major categories of Council-created reserves are: - Water and roads Wastewater treatment - 5 - 5 (HDC funds) Plant, Equipment and Vehicle Replacement 3,198 Safe healthy and Emergency funds 459 17 (1,278) 2,395 Funds are set aside to provide for the ongoing replacement of operational assets such liveable communities as essential plant, vehicles and equipment. 2,265 All activities Sundry reserves 27,629 - (27,647) 2,247 Property Maintenance and Improvements (353) All activities Separate reserves 2,116 - (3,420) (1,658) Funds are set aside to maintain and enhance existing Council assets and also to provide 620 Economic and Other 198 5 (440) 381 funds for new projects such as motorway linkages. community development General Purpose Reserves Each of the Council’s rating groups has a general purpose reserve. Any year-end balance 25,057 33,177 97 (38,478) 19,852 for the rating group is placed into the general purpose reserves to enable the use of (2,076) Less: NCC share of landfill (131) (22) 160 (2,068) those funds to be debated at the next budget round. reserves 22,982 33,046 75 (38,318) 17,784

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18. Restricted Reserves (Council only) These are reserves, the use of which is restricted by some external force, e.g. trust deeds or legislation. Trusts and bequests are funds which have been bequeathed to Council for specific purposes. Funds are separately invested with the interest earned on these investments added to the balance of the various special funds. Reserve purchase and development funds are funds which have been levied on subdivisions under Section 274 of the Local Government Act 1974. Loan redemption reserves reflect the balance of funds held in sinking fund investments, which are funds set aside for the repayment of debt. Balance 2019 Activity Deposits Interest Withdrawals Balance 2020 $'000 Group $'000 $'000 $'000 $'000 1,519 Economic and Trusts and - 11 - 1,529 community bequests development 1,567 Economic and Development 252 17 - 1,837 community reserves development 562 Economic and Reserve purchase - 6 - 569 community and development development funds

3,648 252 35 - 3,935

112 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

19. Revaluation Reserves Asset revaluation reserves consist of:

Balance Revaluation Transfer to retained earnings Balance 2019 movement on disposal of property 2020 $'000 $'000 $'000 $'000

COUNCIL

Operational Assets 46,252 Land and buildings (5,223) - 41,029

31 Library books (31) - -

- Forestry - - -

46,283 (5,254) - 41,029

Infrastructural Assets

37,643 Bridges - - 37,643

375,852 Roading - - 375,852

143,071 Stormwater disposal 10,004 - 153,075

130,603 Wastewater disposal 16,674 - 147,278

61,912 Water supply 14,473 - 76,385

27,773 Park assets - - 27,773

776,854 41,152 - 818,006

(3) Fair value through comprehensive revenue 2 - (2)

823,134 35,898 - 859,033 GROUP 2,741 Hawke’s Bay Airport (85) - 2,656

825,875 35,813 - 861,689

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20. Reconciliation of net surplus/(deficit) after tax to net cash flows from operating activities

Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 $'000 $'000 $'000 $'000

2,240 3,387 Net surplus/(deficit) on operations 1,233 1,054 ADD/(LESS): NON-CASH ITEMS 34,085 34,624 Depreciation and amortisation expense 34,944 35,491

- (107) Share of associates retained surplus 684 (214)

(4,976) (4,976) Vested infrastructure (5,098) (5,098)

- - Devaluation of Property, Plant & Equipment - 33

6,600 6,600 Unrealised gains/losses on derivative financial instruments 2,791 2,791

35,709 36,141 Total non-cash items 33,321 33,003 ADD/(LESS): NET MOVEMENTS IN WORKING CAPITAL (277) (377) (Increase) decrease in debtors and other receivables (786) (898)

2,286 2,228 Increase (decrease) in creditors and other payables 1,862 3,882

53 53 (Increase) decrease in inventories (51) (52)

(3) 4 Increase (decrease) in provisions and employee entitlements (non-current) 825 775

2,059 1,907 Total net movements in working capital 1,849 3,707 ADD/(LESS): ITEMS CLASSIFIED AS INVESTING OR FINANCING ACTIVITIES 1,394 1,394 (Gains)/Losses on sale of Property, Plant & Equipment and investments 2,706 2,706

1,394 1,394 Total non-operating activities 2,706 2,706

41,402 42,829 Total net cash inflow (outflow) from operating activities 39,109 40,470

114 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

21. Remuneration Remuneration of Elected Representatives Actual Council Actual Council The Council incurred the following expenditure for the year ended 30 June 2020: 2019 Remuneration Allowance 2020 $ $ $ $ Chief Executive Remuneration MAYOR AND COUNCILLORS The Chief Executive of the Council is appointed under section 42 of the Local 136,824 S Hazlehurst (Mayor) 147,184 470 147,654 Government Act 2002. 74,650 T Kerr (Deputy Mayor) 74,047 14.721 88,768 Total Chief Executive remuneration for the year ending 30 June 2020 is $377,200 - A Corbin 33,590 2,072 35,662 (2019: $350,855). 53,672 A Redstone 53,493 4,154 57,647 In terms of the contract, the Chief Executive received the following additional benefits: 54,711 B Barber 59,072 4,698 63,770 Actual Council Actual Council 2019 2020 49,552 D Harvey 50,112 913 51,025 $ $ 48,229 E Lawson 53,177 913 54,090 3,907 Fringe Benefit Tax 3,747 54,888 G Lyons 19,668 10,081 29,749 11,358 Motor Vehicle Allowance 10,454 52,688 G Travers 58,533 913 59,446 13,921 Superannuation and Other 10,573 48,506 H O'Keefe 49,776 950 50,726

- Annual Leave Termination Payment - 45,177 J Poulain 14,035 366 14,401 53,392 K Watkins 53,590 913 54,503 321,669 Salary 352,426 52,848 M Dixon 53,590 1,178 54,768

- P Oli 31,205 547 31,752

52,138 R Heaps 15,193 2,081 17,274

48,506 S Nixon 49,776 913 50,689

- S Siers 33,590 3,308 36,898

48,863 W Schollum 50,957 883 51,840 8,560 N Dawson (Rural Community Board – Chair) 12,317 2,040 14,357 14,625 S Maxwell (Rural Community Board) 10,165 3,188 13,353 6,441 P Kay (Rural Community Board) 2,080 216 2,296 4,644 L Wilson (Rural Community Board) 2,313 366 2,679 8,560 M Lester (Rural Community Board) 2,313 366 2,679 917,474 Total elected representatives 929,776 56,250 986,026 remuneration

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 115

Total annual remuneration by band for employees as at 30 June 22. Capital commitments and operating leases

Actual Council Actual Council Capital commitments 2019 2020 215 <$60,000 <$60,000 196 Capital commitments are capital expenditure contracted for at balance date but not yet incurred for property, plant and equipment. 83 $60,000-$79,999 $60,000-$79,999 97 Actual Council Actual Group Actual Council Actual Group 67 $80,000-$99,999 $80,000-$99,000 77 2019 2019 2020 2020 $'000 $'000 $'000 $'000 45 $100,000-$119,999 $100,000-$119,999 49 11,663 11,663 Building 4,739 4,739

17 $120,000-$139,999 $120,000-$139,999 24 5,236 5,236 Water System 13,638 13,638 4,598 4,598 Roading Network 3,354 3,354 12 $140,000-$159,999 $140,000-$159,999 9 - - Investment - - 5 $160,000-$199,999 $160,000-$199,999 7 21,497 21,497 Commitments approved and 21,731 21,731 6 $200,000-$239,999 $200,000-$239,999 7 contracted

1 $240,000-$341.910 $240,000-$379,999 1

451 Total employees Total employees 467 Operating leases as lessee The Council and Group lease property, plant and equipment in the normal course of its business. The majority of these have a non-cancellable term of 36 months. The future At balance date, the Council employed 336 (2019: 311) full-time employees, with the aggregate minimum lease payments payable under non-cancellable operating leases are balance of staff equivalent representing 75 (2019: 79) full-time employees. A full-time as follows: employee is determined on the basis of a 40-hour working week. Actual Council Actual Group Actual Council Actual Group Severance payments 2019 2019 2020 2020 $'000 $'000 $'000 $'000 Severance payments include any consideration (monetary or non-monetary) provided NON-CANCELLABLE OPERATING to any employee in respect of the employee’s agreement to the termination of their LEASE COMMITMENTS employment with Council. 27 27 Not later than one year 34 34 For the year ended 30 June 2020 Hastings District Council made nine severance 50 50 Later than one year and not later 50 50 payments to employees totalling $109,874, $71,752, $32,340, $20,987, $18,629, than five years $14,410, $11,485, $3,446 and $2,633 (2019: $12,050). - - Later than five years - - 76 76 Total non-cancellable operating 84 84 leases

116 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

Operating leases as lessor 23. Omarunui joint landfill (63.68% owned by The Council leases property in the normal course of its business. The majority of these Hastings District Council) have a non-cancellable term of 36 months. The future aggregate minimum lease The Council's interest in Omarunui Refuse Landfill joint committee is accounted for as a payments to be collected under non-cancellable operating leases are as follows: jointly controlled asset. The figures in the note are disclosed at full face value rather Actual Council Actual Group Actual Council Actual Group than at our ownership interest of 63.68%. The financial accounts only include Hastings 2019 2019 2020 2020 $'000 $'000 $'000 $'000 District Council's 63.68% share. There are no capital commitments and contingent liabilities arising from involvement in the joint venture. NON-CANCELLABLE OPERATING LEASE COMMITMENTS Actual Council Actual Council 2019 2020 298 298 Not later than one year - - $'000 Omarunui Refuse Landfill $'000 497 497 Later than one year and not later - - 3,699 Current assets 3,686 than five years 5,621 Non-current assets 6,010 - - Later than five years - - 830 Non-current liabilities 1,900

796 796 Total non-cancellable operating - - 5,963 Revenue 7,525 leases 4,378 Expenses 5,173 1,574 Surplus 1,282 No contingent rents have been recognised during the period. Due to the earthquake- prone status of Heretaunga House, all of the long-term lease arrangements with the Forestry assets tenants were surrendered. Month-by-month agreements were put in place to allow the Actual Council Actual Group Actual Council Actual Group tenants to seek alternative arrangements. 2019 2019 2020 2020 $'000 $'000 $'000 $'000 FORESTRY ASSETS 20 20 Balance at 1 July 60 60 40 40 Increases due to purchases - - - Gains/(losses) arising from changes - - attributable to physical changes - - Gains/(losses) arising from changes - - attributable to price changes - - Decreases due to sales - - - - Decreases due to harvest - - 60 60 Balance at 30 June 60 60

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 117

The Omarunui Refuse Landfill is owned jointly by the Council (63.68%) and Napier City Post-closure responsibilities: Council (36.32%). The Omarunui Refuse Landfill is operated by the Council on behalf of • Treatment and monitoring of leachate. a joint committee (comprising elected representatives from the two councils). The • Ground water and surface monitoring. Omarunui Refuse Landfill joint venture owns 46.1 hectares of Pinus Radiata forest in two blocks. The larger of which is 43.2 hectares which was replanted in 2018/19. The • Gas monitoring and recovery. smaller block is 2.9 hectares and was planted in 2003. The forestry asset reported is for • Implementation of remedial measures such as needed for cover and control systems. Hastings District Council's share only (63.68%). • Ongoing site maintenance for drainage systems, final cover and vegetation. There are no restrictions over the title of forestry assets. No forestry assets are pledged The management of the landfill will influence the timing of recognition of some as security for liabilities. liabilities – for example, the current landfill will operate in four stages. A liability relating to stages three and four will only be created when the stage is commissioned and when Valuation assumptions refuse begins to accumulate in these stages. Independent registered valuers, Woodlands Pacific Consulting Limited, have valued forestry assets as at 30 June 2018. Capacity of the site The Landfill is divided into four valleys as below: Financial risk management strategies The Omarunui Refuse Landfill joint venture is exposed to financial risks arising from Total Useful life Remaining capacity of valley useful life changes in timber prices. The Omarunui Refuse Landfill joint venture is a long-term 3 forestry investor and does not expect timber prices to decline significantly in the Valley A: opened in December 1988 and reached capacity in 2006 2,600,000m 17 years 0 foreseeable future. Therefore, no measures have been taken to manage the risks of a Valley D: opened in December 2006 and in operation 2,099,521m3 18 years 5.34 years decline in timber prices. The Omarunui Refuse Landfill joint venture reviews its outlook Valley B & C: not in operation yet Estimated for timber prices regularly in considering the need for active financial risk management.

24. Provisions Estimates of the life have been made by the Council’s engineers based on historical Landfill aftercare provision volume information. These estimates can change from year to year dependant on the The Omarunui Refuse Landfill is owned jointly by the Council (63.68%) and Napier City amount of tonnages entering the landfill. Council (36.32%). The Omarunui Refuse Landfill is operated by the Council on behalf of The cash outflows for landfill post-closure are expected to occur in 2025 for Valley D a joint committee (comprising elected representatives from the two councils). The joint and began in 2007 for Valley A. The long-term nature of the liability means that there Landfill Committee gained a resource consent in 1985 to operate the Omarunui Landfill. are inherent uncertainties in estimating costs that will be incurred. The provision has The Councils have responsibility under the resource consent to provide ongoing been estimated taking into account existing technology and is discounted using a maintenance and monitoring of the landfill after the site is closed. There are closure and discount rate of 0.00%. post-closure responsibilities such as the following: The following major assumptions have been made in the calculation of the provision: Closure responsibilities: • Aftercare will be required for 30 years after the closure of each stage. • Final cover application and vegetation. • The annual cost of aftercare for Valley A and D is $201,500. • Incremental drainage control features. • The provision reported is for Hastings District Council's share only (63.68%).

• Completing facilities for leachate collection and monitoring. • Completing facilities for monitoring and recovery of gas.

118 // HASTINGS DISTRICT COUNCIL ANNUAL REPORT 2019/2020

Actual Council Actual Council 25. Financial instruments 2019 2020 $'000 $'000 Actual Council Actual Group Actual Actual Group 2019 2019 Council 2020 2020 LANDFILL AFTERCARE LIABILITY $'000 $'000 Financial instruments $'000 $'000

521 Opening balance 541 FINANCIAL INSTRUMENT CATEGORIES 33 Provision written back during the year 463 Loans and receivables 2,939 4,342 Cash and cash equivalents (254) 536 (13) Amounts charged to provision during the year 315 12,455 12,801 Receivables 13,241 13,699 541 Closing balance 1,319 1,688 1,688 NZ LGFA Borrower notes 2,400 2,400

Fair value through surplus or deficit – The estimated aftercare costs for 2020 were $201,500 (2019: $93,000). These estimates held for trading are based on information received from Tonkin & Taylor and result in an adjustment in - - Derivative financial instrument - - the aftercare liability estimate of ($1,221,819). Fair value through Other comprehensive revenue ETS levy provision 157 157 Civic Financial Services Limited 157 157

Actual Council Actual Council 615 615 NZ LGFA Unlisted shares 615 615 2019 2020 17,855 19,603 Total loans and receivables 16,160 17,408 $'000 $'000 FINANCIAL LIABILITIES ETS LEVY PROVISION Financial liabilities at amortised cost 467 Opening balance 453 - - Bank Overdraft 254 254 1,664 Additional provisions made 3,015 23,578 23,989 Payables 23,710 24,558 (1,678) Amounts used (2,557) 106,240 106,240 Secured loans 152,815 152,815

453 Closing balance 912 Fair value through surplus or deficit – held for trading

13,566 13,566 Derivative financial instrument 18,762 18,762 143,385 143,796 Total financial liabilities at 195,541 196,389 amortised cost

The Council (including Group) is risk averse and seeks to minimise exposure arising from its Treasury activities. The Council has established a Treasury Policy specifying what transactions can be entered into.

ANNUAL REPORT 2019/2020 HASTINGS DISTRICT COUNCIL // 119

Fair value hierarchy There were no transfers between the different levels of the fair value hierarchy: For those instruments recognised at fair value in the statement of financial position, fair Level 3 – Valuation techniques with significant non-observable inputs. values are determined according to the following hierarchy: The table below provides reconciliation from the opening balance to the closing balance • Level 1 – Quoted market price – financial instruments with quoted prices for for the Level 3 fair value movements. identical instruments in active markets. 2019 2020 • Level 2 – Valuation technique using observable inputs – financial instruments with $'000 $'000 quoted prices for similar instruments in active markets or quoted prices for NZ LGFA UNLISTED SHARES identical or similar instruments in inactive markets and financial instruments valued 373 Balance at 1 July 615 using models where all significant inputs are observable. - Purchases - • Level 3 – Valuation techniques with significant non-observable inputs – financial - Sales - instruments valued using models where one or more significant inputs are not 242 Fair value adjustment on initial recognition observable. - Transfers into level 3 - The following table analyses the basis of the valuation of classes of financial instruments - Transfers out of level 3 - measured at fair value in the statement of financial position: 615 Balance at 30 June 615 Total Total Quoted Valuation Significant 2019 2020 market technique non-observable 2019 2020 $'000 $’000 price observable inputs inputs $'000 $'000 COUNCIL CIVIC FINANICAL SERVICES LIMITED

Financial assets 157 Balance at 1 July 157 - Derivative financial instrument - - - - - Purchases - 157 Civic Financial Services Limited 157 - - 157 - Sales - 615 NZLGFA Unlisted shares 615 - - 615 - Transfers into level 3 - Financial liabilities - Transfers out of level 3 - 13,566 Derivative financial instrument 18,762 - 18,762 - 157 Balance at 30 June 157

GROUP Financial assets Financial instrument risks - Derivative financial instrument - - - - The Council's activities expose it to a variety of financial instrument risks, including market risk, credit risk, and liquidity risk. The Council and Group have a series of policies 157 Civic Financial Services Limited 157 - - 157 to manage the risks associated with financial instruments and seek to minimise 615 NZLGFA Unlisted shares 615 - - 615 exposure from their treasury activities. The Council has established Council-approved Financial liabilities Liability Management and Investment policies. These policies do not allow any 13,566 Derivative financial instrument 18,762 - 18,762 - transactions that are speculative in nature to be entered into.

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Market risk Maximum exposure to credit risk The Council's maximum credit exposure for each class of financial instrument is as follows: Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument Actual Council Actual Group Actual Council Actual Group 2019 2019 2020 2020 will fluctuate due to changes in foreign exchange rates. $'000 $'000 $'000 $'000 Council had no exposure to currency risk as at 30 June 2020. 2,939 4,342 Cash at bank and term deposits (254) 536 Interest rate risk 12,455 12,801 Receivables 13,241 13,699 Council is exposed to interest rate risk and seeks to minimise this exposure through 157 157 NZ Local Govt Insurance Corporation 157 157 adopted treasury policies. This includes entering into interest rate options or interest Limited rate swap agreements. As at 30 June 2020, the Council had entered into interest rate 1,688 1,688 NZ LGFA Borrower notes 2,400 2,400 swap agreements to a value of $80.5 million at interest rates between 2.8% and 5.9%. (2019: $73.5 million at interest rates between 2.2% and 5.9%). 615 615 NZ LGFA Unlisted shares 615 615 Cash flow interest rate risk - - Derivative financial instruments assets - - Cash flow interest rate risk is the risk that the cash flows from a financial instrument will 17,855 19,604 Total Credit Risk 16,160 17,408 fluctuate because of changes in market interest rates. Borrowing and investments issued at variable interest rates expose the Council and Group to cash flow interest rate risk. Generally, the Council and Group raise long-term borrowing at floating rates and swap Credit quality of financial assets them into fixed rates using interest rate swaps in order to manage the cash flow interest The Council's maximum credit exposure for each class of financial instrument is as follows: rate risk. Such interest rate swaps have the economic effect of converting borrowings at Actual Council Actual Group Actual Council Actual Group floating rates into fixed rates that are generally lower than those available to the Council 2019 2019 Counterparties with 2020 2020 or Group borrowed at fixed rates directly. Under the interest rate swaps, the Council $'000 $'000 Credit Ratings $'000 $'000 and Group agree with other parties to exchange, at specified intervals, the difference CASH AT BANK AND TERM DEPOSITS between fixed contract rates and floating rate interest amounts calculated by reference 2,939 4,342 Credit Rating B+ (254) 536 to the agreed notional principal amounts. CIVIC FINANCIAL SERVICES LIMITED Credit risk 157 157 Credit Rating B+ 157 157 Credit risk is the risk that a third party will default on its obligations to the Council, causing Council to incur a loss. Due to the timing of its cash inflows and outflows, the DERIVATIVE FINANCIAL INSTRUMENT

Council invests surplus cash into term deposits which gives rise to credit risk. As at ASSETS 30 June 2020, Council had $14,180,000 on term deposit (2019: $nil). The Group, at - - Credit Rating AA - - NZ LGFA BORROWER NOTES 30 June 2020, had $14,180,000 (2019: $233,000) on term deposit. The Council is exposed to credit risk as a guarantor of all of LGFA’s borrowings. Information about this 1,688 1,688 Credit Rating AA+ 2,400 2,400 exposure is explained in Note 28. NZ LGFA UNLISTED SHARES

The Council's treasury policy limits the amount of credit exposure to any one financial 615 615 Credit rating AA+ 615 615 institution or organisation. Treasury-related transactions would only be entered into with organisations specifically approved by the Council. Counterparties and limits can only be approved on the basis of long-term credit ratings (Standard & Poor's or Moody's) being A- and above.

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The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to Standard and Poor’s credit ratings (if available) or to historical information about counterparty default rates. Receivables mainly arise from the Council's statutory functions, therefore, there are no procedures in place to monitor or report the credit quality of receivables with reference to internal or external credit ratings. The Council has no significant concentrations of credit risk in relation to receivables, as it has a large number of credit customers, mainly ratepayers, and the Council has powers under the Local Government (Rating) Act 2002 to recover outstanding debts from ratepayers. Liquidity risk Management of liquidity risk Liquidity risk is the risk that the Council will encounter difficulty raising liquid funds to meet commitments as they fall due. The Council's treasury policy requires that sufficient facilities must be in place to ensure the Council can borrow enough to meet its projected funding requirements plus a further 10% to cover any unexpected events. The Council is exposed to liquidity risk and seeks to minimise this exposure by being able to realise various short term investments and by being able to draw on committed and uncommitted bank facilities totalling $121 million (2019: $116 million). Included in the committed facilities is a bank overdraft limit of $0.5 million at an interest rate of 5.85%. The Council is exposed to liquidity risk as a guarantor of all of LGFA's borrowings. This guarantee becomes callable in the event of the LGFA failing to pay its borrowings when they fall due. Information about this exposure is explained in Note 28.

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The table below analyses the Council and Group’s financial liabilities into relevant maturity groupings based on the remaining period at balance date to the contractual maturity date. Future interest payments on floating rate debt are based on the floating rate on the instrument at balance date. The amounts disclosed are the contractual undiscounted cash flows and include interest payments. Carrying Contractual Less than More than amount cash flows 1 year 1-2 years 2-5 years 5 years $'000 $'000 Contractual maturity analysis $'000 $'000 $'000 $'000 2020 Contractual maturity analysis of financial liabilities 23,627 23,627 Payables 23,627 - - - 18,762 11,143 Derivative financial instruments liabilities 2,849 2,000 4,261 2,033 152,822 158,071 Secured loans 21,483 24,255 70,593 41,740 195,465 193,096 Total 48,214 26,256 74,853 43,773 Contractual maturity analysis of financial assets (254) (254) Cash and cash equivalents (254) - - - 12,853 12,853 Debtors and other receivables 12,853 - - - - - Derivative financial instruments assets - - - - 12,599 12,599 Total 12,599 - - - 2019 Contractual maturity analysis of financial liabilities 21,797 21,797 Payables 21,797 - - - 6,477 4,419 Derivative financial instruments liabilities 1,528 1,153 1,527 212 77,740 85,877 Secured loans 23,998 1,527 23,353 36,998 106,014 112,092 Total 47,324 2,679 24,879 37,210 Contractual maturity analysis of financial assets 1,640 1,640 Cash and cash equivalents 1,640 - - - 12,178 12,178 Receivables 12,178 - - - - - Derivative financial instruments assets - - - - 13,818 13,818 Total 13,818 - - -

Group figures are the same as the Council figures except for payables that increase by $848,000 (2019: $411,000), receivables that increase by $458,000 (2019: $346,000) and cash and cash equivalents increased by $536,000 (2019: $1,403,000) Please note Group prior year comparatives have been adjusted to allow for correct comparison to current year due to HB Regional Sports Park Trust now consolidated into the Group accounts.

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Sensitivity analysis The tables below illustrate the potential effect on the surplus or deficit and equity (excluding accumulated funds) for reasonably possible market movements, with all other variables held constant, based on the Council and Group's financial instrument exposure at balance date.

Actual Council 2019 Actual Council 2019 Actual Council 2019 Actual Council 2019 $'000 -100bps $'000 +100bps $'000 -100bps $'000 +100bps

Surplus Surplus Surplus Surplus

FINANCIAL ASSETS (29) 29 Cash and cash equivalents 3 (3) 1. The Council has floating rate debt with a principal amount totalling $150.74m (2019: - - Derivative financial instruments assets - - $106.24m). A movement in interest rates of plus or minus 1% has an effect on interest (29) 29 Total sensitivity on financial assets 3 (3) expense of $1,507,000 (2019: $1,062,000). A

FINANCIAL LIABILITIES movement in market interest rates on fixed rate debt does not have any impact because - - Bank Overdraft - secured loans are accounted for and amortised using the effective interest method. (20,284) (7,252) Derivative financial instruments assets (25,252) (12,771)

(1,062) 1,062 Secured loans (floating interest rate) 1 (1,528) 1,528

(21,345) (6,191) Total sensitivity on financial liabilities (26,779) (11,244)

Explanation of interest rate risk sensitivity The interest rate sensitivity is based on a reasonable possible movement in interest rates, with all other variables held constant, measured as a basis points (bps) movement. For example, a decrease in 100bps is equivalent to a decrease in interest rates of 1.0%. The sensitivity for derivatives (interest rate swaps) has been calculated using a derivative valuation model based on a parallel shift in interest rates of -100bps/+100bps. (2019 -100bps/+100bps).

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26. Post balance date events Hastings District Properties Limited invoiced the Council $nil (2019: $nil) for various services. The balance outstanding at the year end was $nil (2019: $nil). The Council The Council has entered into a loan facility agreement with Hawke’s Bay Airport Limited charged Hastings District Properties Limited $nil (2019: $nil). The balance outstanding at dated 10 July 2020 for a total of $2,160,000. The facility is based on the Council’s the year end was $nil (2019: $nil). shareholding proportion of 24% at an interest rate of 3.5% per annum for a period of up to two years. This is provided for the purpose of meeting the borrower’s operating costs The Council paid to the Hawke's Bay Regional Sports Park Trust operational grants and and capital expenditure for the Hawke’s Bay Airport expansion and terminal services to the value of $382,425 (2019: $309,680) and Capital funding grants of redevelopment project. $250,000 (2019: $250,000). The balance outstanding to the Hawke's Bay Regional Sports Park Trust at 30 June 2020 was $76,450 (2019: $nil). 27. Related party transactions The Council provided a number of services to the Trust during the year including parks Related party transactions maintenance, building consents and other services totalling $65,172 (2019: $96,603). The balance outstanding to the Council at 30 June 2020 was $35,561 (2019: $nil). No related party debts have been written off or forgiven during the year. (2019: nil) All related party transactions were conducted on terms equivalent to those prevailing in Key management personnel an arms-length transaction. During the year, Councillors and key management, as part of a normal customer The Council made grants to Hawke's Bay Museum Trust $598,760 (2019: $598,199) relationship, were involved in minor transactions with the Council (such as payment of which is a Council Controlled Organisation. rates, purchase of rubbish bags and purchase of dog licences). The Council disposed of refuse at the Omarunui Landfill and receipts amounted to $940,364 (2019: $860,190). The Omarunui Landfill is jointly owned by the Council (63.68% share) and the Napier City Council (36.32% share). The Council manages the operations of the Landfill. The Council has a 100% ownership of the Hastings District Holdings Limited company. The Holding company provides Council and the community with an extra layer of governance and a monitoring structure for Council's other CCOs which include the Hawke's Bay Opera House Limited and Hastings District Properties Limited. The Council made grants totalling $nil (2019: $nil) to Hawke's Bay Opera House Limited. The outstanding balance owed to the Hawke's Bay Opera House at 30 June 2020 was $nil (2019: $nil). In addition the Council charged Hawke's Bay Opera House Limited $nil (2019: $nil) during the financial year for various expenses. The outstanding balance owed to the Council at 30 June 2020 was $nil (2019: $nil).

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$ Amount Service $ Amount Service $ Amount Councillor/key Received/Provided Received/Provided Balance Management Personnel Organisation Position/Relationship to Organisation 2019/20 2018/19 Year End Mayor Hazlehurst Central Building Surveyors Director Services Received $1,950 $6,660 $1,950 Tainui Reserve Trustee Receipts $135 $130 Nil

Councillor Kerr HB Regional Sports Park Trustee Receipts $65,172 Nil $35,561 HB Regional Sports Park Trustee Operating Grant/Funding $632,425 $559,680 $76,450

Councillor Harvey Havelock North Business Association Council appointed representative Subscription & Contract for Events $60,000 $18,200 $10,000 Havelock North Business Association Council appointed representative Receipts Ni $484 Nil Hastings Business Association Council appointed representative Receipts $6,736l Nil Nil Hastings Business Association Council appointed representative Funding for Night Markets and Community Grant $319,314 $75,974 Nil Attention Communication Limited Director/Shareholder Advertising in The Profit $8,798 $1,800 $1,000 Sport Hawke's Bay Chairman Funding $203,400 $195,390 $16,125 Sport Hawke’s Bay Chairman Receipts $10,821 $12,060 $22

Councillor Schollum Hastings Business Association Council appointed representative Receipts $6,736 Nil Nil Hastings Business Association Council appointed representative Funding for Night Markets and Community Grant $319,134 $75,974 Nil

Councillor Barber Te Mata Park Trust Board Trustee Funding $360,000 $276,522 Nil Te Mata Park Trust Board Trustee Receipts $135 Nil Nil

Councillor Dixon Te Mata Park Trust Board Trustee Funding $360,000 $276,522 Nil Te Mata Park Trust Board Trustee Receipts $135 Nil Nil

Bronwyn Bayliss Manufacturing Suppliers Ltd Employee of Hastings District Council Purchasing of product by different department $201 $1,014 Nil and husband Manager of Supplier

Bruce Allan Hawke's Bay Opera House Limited Director Funding & Services Nil Nil Nil

Craig Cameron Hawke's Bay Opera House Limited Director Funding & Services Nil Nil Nil

The Council as part of their core business which is providing services to the Hastings District has provided the same services to organisations that are related parties by virtue of having a director or shareholder that is part of the Council's key management personnel.

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There were close family members of key management personnel employed by the 28. Contingencies Council. The terms and conditions of those arrangements were no more favourable than Hastings District Council would have adopted if there were no relationship to key Unquantified claims management personnel. RiskPool Key Management Personnel include the Mayor, Councillors, Chief Executive and other RiskPool provides public liability and professional indemnity insurance for its members. senior management. The Council is a member of RiskPool. The trust deed of RiskPool provides that, if there is shortfall (whereby claims exceed contributions of members and reinsurance recoveries) Actual Council Actual Council 2019 2020 in any Fund year, then the Board may make a call on members for that Fund year. $’000 $’000 RiskPool advised in 2009 that three calls of a similar amount may be required over the COUNCILLORS following three years. In 2012/13 financial year, a final call of $88,300 was advised and paid. A further call was made in 2019/20 for $55,805.57. There have been no further 917 Remuneration 986 calls or payments. 19* Full-time equivalent members 19* Provision for building claims under Financial Assistance Package (FAP) SENIOR MANAGEMENT TEAM, INCLUDING CHIEF EXECUTIVE The Government’s Weathertight Homes Financial Assistance Package aims to help people get their non-weathertight homes fixed faster, and centres on the Government 1,609 Remuneration 2,243 and local authorities each contributing 25% of agreed repair costs and affected 7 Full-time equivalent members 11 homeowners funding the remaining 50% backed by a Government loan guarantee. The impact and cost of future and unknown claims cannot be measured reliably and 2,526 Total key management personnel compensation 3,479 therefore the Council and Group have an unquantified contingent liability. 26 Total full-time equivalent personnel 30 On 11 October 2012, the Supreme Court of New Zealand released a decision clarifying

* Due to the difficulty in determining the full-time equivalent for the Elected Members, the full time that councils owe a duty of care when approving plans and inspecting construction of a equivalent is taken as the number of the Mayor, Councillors and Rural Committee Board. This excludes building that was not purely a residential building. The Court held that there was no Elected Representatives who left their positions during the 2019 financial year. principled basis for distinguishing between the liability of those who played a role in the construction of residential buildings as against the construction of non-residential buildings. This extends the scope of the potential liability for the Council to include non-

residential buildings consented under the Building Act 1991.

New Zealand Local Government Funding Agency The Council is a shareholder of the New Zealand Local Government Funding Agency Limited (NZLGFA). The NZLGFA was incorporated in December 2011 with the purpose of providing debt funding to local authorities in New Zealand and it has a current credit rating from Standard and Poor’s of AA+. The Council is one of 31 shareholders of the NZLGFA. In that regard it has uncalled capital of $373,196 (2019 $373,196). When aggregated with the uncalled capital of other shareholders, $20 million is available in the event that an imminent default is identified. Also, together with the other shareholders, the Council is a guarantor of all of

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NZLGFA’s borrowings. At 30 June 2020, NZLGFA had borrowings totalling $12.438 billion 29. Rate remissions (2019: $10.115 billion). Rates revenue is shown net of rate remissions. The Council allowed for rate remissions Financial reporting standards require the Council to recognise the guarantee liability at under the Local Government Rating Act 2002 in six broad categories. During the year, fair value. However, the Council has been unable to determine a sufficiently reliable fair the Council allowed remission of $415,897 (2019: $342,749) excluding GST. In terms of value for the guarantee, and therefore has not recognised a liability. The Council the Act, certain properties are designated as non-rateable. The Council does not rate considers the risk of NZLGFA defaulting on repayment of interest or capital to be very such properties and they are not included in the following remission figures. low on the basis that: Actual Council Actual Council • We are not aware of any local authority debt default events in New Zealand; and 2019 2020 $’000 $’000 • Local Government legislation would enable local authorities to levy a rate to recover sufficient funds to meet any debt obligations if further funds were 24 Special Rateable Value 23 required. 65 Community & Sporting Organisations 68

Legal proceedings and disputes 19 Covenant 20 There were no personal grievances against the Council as at 30 June 2020. 22 Voluntarily Protected Land 23 Impacts on Contracts from COVID-19 7 Swimming Pool Safety 8 As at 30 June 2020, there have been a number of claims from contractors relating to the impact of COVID-19 on their businesses. Whilst some of these claims have been 76 Penalties 122 approved, there are still a number being worked through. The quantum of these claims 41 Unutilised Māori Land 52 will not be off sufficient size to have a material impact on the reader’s view of the Annual Report. 88 Sundry 99 343 416

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30. Capital management 31. Asset insurance The Council’s capital is its equity (or ratepayers’ funds), which comprise accumulated The total value of all assets of the Hastings District Council that are covered by funds and reserves. Equity is represented by net assets. insurance contracts and the maximum amount to which they are insured: The Local Government Act 2002 (the LGA) requires the Council to manage its revenues, Insurance contracts expenses, assets, liabilities, investments and general financial dealings prudently and in Actual Council Actual Council a manner that promotes the current and future interests of the community. Ratepayers’ 2019 Policy type 2020 funds are largely managed as a by-product of managing revenues, expenses, assets, $’000 (maximum amount insured) $’000 liabilities, investments and general financial dealings. 340,014 Material Damage (mainly buildings and contents) 388,202 The objective of managing these items is to achieve intergenerational equity, which is a principle promoted in the LGA and applied by the Council. Intergenerational equity 5,363 Motor Vehicles (includes mobile plant and equipment) 5,344 requires today’s ratepayers to meet the costs of utilising the Council’s assets and not expecting them to meet the full cost of long-term assets that will benefit ratepayers in Assets (mainly buildings and contents) with a replacement value of $388,201,501 future generations. Additionally, the Council has in place asset management plans for (2019: $340,014,449) are insured under Council’s Material Damage Policy. The cover is major classes of assets detailing renewal and maintenance programmes, to ensure that ratepayers in future generations are not required to meet the costs of deferred for replacement value plus an allowance for inflation and the cost of demolition. renewals and maintenance. The Council's vehicles, mobile plant and equipment are insured under a Motor Vehicle The LGA requires the Council to make adequate and effective provision in its Long-Term Policy that covers all such equipment which is owned or otherwise the responsibility of the Plan (LTP) and in its Annual Plan (where applicable) to meet the expenditure needs insured. Cover provides for cost of replacement for vehicles under twelve months old and identified in those plans. The LGA also sets out the factors that the Council is required to market value for vehicles over twelve months old. The original purchase price of vehicles, consider when determining the most appropriate sources of funding for each of its plant and equipment insured under this policy is $5,343,546 (2019: $5,362,979). activities. The sources and levels of funding are set out in the funding and financial Claims under both the Material Damage and Motor Vehicle Policies are subject to policies in the Council’s LTP. various excesses dependant on the particulars of the claim. The Council has the following Council-created reserves: The total value of all assets of the Hastings District Council that are covered by financial • Reserves for different areas of benefit; risk-sharing arrangements and the maximum amount available to the local authority • Self-insurance reserves; and under those arrangements: • Trust and bequest reserves. In the event of a major disaster or catastrophe, the cost of replacing water, sewage and Reserves for different areas of benefit are used where there is a discrete set of rate or other essential services (not roads and bridges) is shared with 60% of the cost met by levy payers as distinct from payers of general rates. Any surplus or deficit relating to central government and 40% met by the local authority. Hastings District Council is a these separate areas of benefit is applied to the specific reserves. member of the Local Authority Protection Programme (LAPP). The LAPP fund is a cash Self-insurance reserves are built up annually from general rates and are made available accumulation mutual pool established to help local authorities meet their 40% share in for specific unforeseen events. The release of these funds can generally be approved the event of such a disaster; it does this by maintaining cash reserves and also only by the Council. purchasing infrastructure reinsurance. Trust and bequest reserves are set up where the Council has been donated funds that For 2019/20, the maximum payable by LAPP was up to a limit of $140 million per event are restricted for particular purposes. Interest is added to trust and bequest reserves where applicable and deductions are made where funds have been used for the for all member councils (being 40% of $350 million). The central government share is purpose they were donated. unlimited.

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The value of infrastructural assets declared by the Council to be covered by the LAPP fund is $913,077,042 (2019: $869,576,864). Payments from both LAPP and central government are subject to various thresholds and excesses. The value of bridge assets declared by the Council to be covered for insurance is $125,836,732 (2019: $110,915,330). Payments from both LAPP and central government are subject to various thresholds and excesses. The total value of all assets of the Hastings District Council that are self-insured and the value of any fund maintained by the local authority for that purpose: Hastings District Council has a number of other assets not covered by insurance contract or risk-sharing arrangements and are therefore self-insured. The major category in this group would be roads valued at 30 June 2020 $1,102,596,885 (excluding land), (2019: $1,092,716,696). There would also be a number of other sundry items that would fall into this group.

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Council controlled organisations and other interests

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Hawke’s Bay Museums Trust

Policies and objectives regarding ownership and control The Scope and Nature of Activities to be undertaken by the Napier City Council are outlined below. These activities will be achieved in accordance with agreed Museum The Trust is a Council Controlled Organisation as three of the five-member Board are Industry Standards and consistent with HBMT policies and procedures. nominated jointly by Hastings District Council and Napier City Council. This is in accordance with the revised Constitution and Rules adopted on 30 October 2006. The 1) Protection: Trust's Constitution and Rules have been amended to reflect the change in role to that • Storage including pest control, storage media, shelving and air quality of owner and guardian of the regional collection. The Hawke's Bay Museums Trust is • classified as an associate entity for financial reporting purposes. Security including alarm and access systems and monitoring, and insurance • Records management including Vernon database and other records Scope and nature of activities 2) Quality including conservation, accessioning and de-accessioning. The objectives of the Trust are: 3) Access including exhibitions, research and archives. • To hold and protect it’s collection, known as ‘The Regional Collection’ for the 4) Development including fundraising, reserves management and relationship people of Hawke’s Bay development. • To encourage the development of quality cultural facilities capable of accessing or drawing upon the collection within Hawke’s Bay • To advance and promote cultural heritage and arts through the use of the collection • To oversee collection management through the development of collection policy, conservation and risk management strategies via a contract for services with the Napier City Council • To oversee collection development through the regulation of the acquisition and disposal of collection items • To manage the bequests vested in the Trust in a way which maximises benefit to the collection • There has been no change between the intended and actual nature and scope of activities delivered.

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Performance targets Financial performance

Key result 2019/20 2019/20 2019/20 2019/20 area Performance indicator target actual ($) budget actual Protection Full insurance cover is provided for Yes Yes Total revenue 1,207,620 1,271,481 the collection Total expenses 1,207,620 1,201,428 Collections are stored in an No items reported No damage Surplus/(deficit) - 70,053 acceptable environment to have suffered deterioration due to the environment

Quality Every item accessioned into the Yes Yes collection has undergone a detailed selection process within the framework of the Collection Strategy De-accessions are managed in Yes Yes accordance with the Collection Strategy and reported to the Board Access HBMT collections are used for 1,500 enquiries 29,660 online catalogue academic and personal research sessions 554 enquiries Collections are made available to the Minimum of five Five Turuturu, Mystery of public through quality exhibitions collection-based History, Rongonui and exhibitions Tender is the Night, He Waka Kōrero Māori Development Bequests fund income is used in the Yes Yes manner determined by the donor Conservation funds income is used Yes Yes solely for collection care Joint HBMT/Te Rōpū Kaiawhina 1 per annum 0 Taonga meeting held

Development Unspent bequest fund incomes allocated for acquisitions and collection care are kept in special funds and carried forward to the next financial year for future spending.

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Hawke’s Bay Airport Limited

Policies and objectives regarding ownership and control Activity Measure Status Sustainability Develop and implement Sustainability Framework ⚫ Hawke’s Bay Airport Limited (HBAL) is a company incorporated in New Zealand under Establish Energy and Carbon Baseline Policy and Framework ⚫ the Companies Act 1993 and is owned by the Crown: 50%, Napier City Council: 26%, Develop a Three-Water Policy ⚫ Hastings District Council: 24%. HBAL is defined as a Council Controlled organisation Operations Enhance understanding of our travellers and key customers ⚫ pursuant to Part 5 of the Local Government Act 2002. Implement our Safety Management System ⚫ Complete Stage 2 of the Terminal Expansion Project ⚫ HBAL is classified as an associate entity for financial reporting purposes. Develop our digital strategy incorporating improved business efficiency, passenger ⚫ journey enhancement and advertising solutions Scope and nature of activity Design and development of apron capacity plan to guarantee level of service to ⚫ • To provide safe, convenient and appealing services and facilities for airlines, air airline operators and enable future airside business development Bi-annual Strategic Risk Review ⚫ travellers, employees and all other visitors to the airport. Wildlife Management Plan developed and operational ⚫ • To support regional economic development through strategic infrastructure. Commercial Implement Carpark System enhancement ⚫ • To generate appropriate returns on assets employed and shareholder’s equity. Review Aeronautical Revenue and Route Development Strategy ⚫ Develop terminal retail in line with the revised terminal expansion to provide a ⚫ • To position the airport for aviation growth over the long term. balanced shopping environment for consumers, with a mix of local owner-operators and corporate-owned stores Performance Complete Airfreight Feasibility study ⚫ The following is a statement of service performance relating to key specific objectives Property Finalise the 20-year Masterplan incorporating forecasts/noise/land use ⚫ Stimulate property development opportunities to leverage land bank returns ⚫ listed in the Company’s Statement of Intent for the year ending 30 June 2020. Property Development underway for new tenancies ⚫ 2019/20 2019/20 Partners Proactively engaged with the Hawke’s Bay community, local and central government and ⚫ ($) target actual other key stakeholders Total revenue 8,333,136 6,276,501 Undertake stakeholder and public consultation as part of masterplan development ⚫ Profit before income tax 4,459,088 (981,382) Continued collaboration with Mana Whenua on terminal development sense of ⚫ place/masterplan Profit after tax 1,874,067 (1,012,640) Partnership with key business, airlines and community groups ⚫ Return on Equity 5.8% -3.0% People To create a HBAL Airport team culture where the focus is external, on our customers and ⚫ our key stakeholders, where excellent service is the norm and our business enjoys a strong reputation for delivery a high standard of services, facilities and initiatives Net dividend declared in December 2019 was $Nil compared to a target from 2018/19 Review economics of scale and insourcing versus outsourcing of key operational resources ⚫ financial year of $749,627. Invest in Teams Development and Training ⚫ Develop Team capability ⚫ KEY: • Meets or Exceeds target • Within 10% of target • 10% or more below target

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NZ Local Government Funding Agency Limited

Policies and objectives regarding ownership and control Performance indicators The New Zealand Local Government Funding Agency Limited (LGFA) is owned by 30 Local LGFA has the following performance targets: Authority Councils and the Crown. The LGFA is enabled under the Local Government Outcome Borrowing Act 2011 and is a Council-Controlled Organisation (CCO) for the purposes of the Financials Target Result (target met?) Local Government Act 2002. Hastings District Council's shareholding is 1.7%. Net interest income >$17.9m $18.20m Yes Issuance and operating expenses <$6.3m $6.26m Yes

Scope and nature of activity Total lending to participating local authorities >$9.792m $10.899m Yes LGFA will raise debt funding either domestically and/or offshore in either New Zealand Outcome dollars or foreign currency and provide debt funding to New Zealand local authorities, Performance measure Result (target met?) and may undertake any other activities considered by the Board of LGFA to be Conduct an annual survey of councils who borrow from LGFA – aiming to 100% Yes reasonably related or incidentally to, or in connection with, that business. achieve at least an 80% satisfaction score for the value added by LGFA

In lending to Participating Local Authorities, LGFA will: Meet all lending requests from Participating Local Authorities, where those Yes • Operate in a manner to ensure LGFA is successful and sustainable in the long term. requests meet LGFA operational and covenant requirements • Educate and inform participating local authorities on matters within the scope of Achieve 75% market share of all council borrowing in New Zealand 86% Yes LGFA’s operations. Review each Participating Local Authority’s financial position, its headroom No under LGFA policies and arrange to meet each Participating Local Authority • Provide excellent service to Participating Local Authorities. at least annually • Ensure excellent communication exists and be professional in its dealings with all its No breaches of Treasury Policy, any regulatory or legislative requirements No stakeholders. including the Health and Safety at Work Act 2015 • Ensure its products and services are delivered in a cost effective manner. Successfully refinance of existing loans to councils and LGFA bond Yes maturities as they fall due

Maintain a credit rating equal to the New Zealand Government rating Yes where both entities are rates by the same credit rating agency

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Other Council Controlled Organisations

Hastings District Holdings Limited Hawke’s Bay Regional Sports Park Trust HDHL is a Limited Liability Company incorporated under the Companies Act 1993. HDHL The Hawke’s Bay Regional Sports Park Trust is incorporated under the Charitable Trusts is exempted from being a Council Controlled Organisation (CCO) as defined by Section Act 1957 and is comprised of a Board of Five Trustees who oversee the governance of 7(3) of the Local Government Act 2002 and is a 100% wholly owned subsidiary of the the Trust. Hastings District Council. Scope and Nature of Activities HDHL holds the shares in: Their mission is to create an environment that drives outstanding performances from Hawke’s Bay Opera House Ltd sportspeople and contributes strongly to the wellbeing of the people of Hawke’s Bay. Due to the closure of the Hawke’s Bay Opera House for earthquake strengthening, The purposes of the Trust, as set out in the Trust Deeds, specifically identify the Hawke’s Bay Opera House Ltd has ceased trading and as at 30 June 2014 has been following: exempted by Council from being a CCO under section 7(3) of the Local Government Act a) Establish, promote and administer a regional sports and recreational park in 2002. Hawke’s Bay Opera House Ltd (Toitoi) has now been reopened but this activity is Hastings (the ‘Regional Sports Park’) and to develop and to maintain its land and now operating as a business unit of Hastings District Council and not in a separate facilities, entity. b) Encourage the use of the Regional Sports Park by the public in general, through Hastings District Properties Ltd recreation or other leisure-time activities, in order to improve public health, fitness and wellbeing, Due to the lack of new developments coming on stream the property company was put c) By promoting use of the Regional Sports Park to enhance economic growth, into recession in December 2016. As at 30 June 2018 it has been exempted by Council employment and development opportunities in the Hawke’s Bay region, and from being a CCO under section 7(3) of the Local Government Act 2002. d) Provide facilities for organised and informal sporting and recreational activities. Te Mata Park Trust Board The Hastings District Council has significant influence over the Trust through two Council appointments on the appointments panel, and the Trust receives a significant The Te Mata Park Trust Board has been exempted by Council under section 7(3) of the operating grant from Hastings District Council. Council also receives benefits from the Local Government Act 2002 from being a CCO. complementary activities of the Trust. The Trust is still identified as an associate given the Council’s level of influence and financial support and has been consolidated in the Group financial statements.

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Treasury Policy

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Purpose of Policy

The purpose of the Treasury Policy is to outline approved policies and procedures in respect of all treasury activity to be undertaken by the Council. The formalisation of such policies and procedures will enable treasury risks within the Council to be prudently managed. a) Liability Management Policy b) Investment policies Council’s liabilities comprise borrowings and various other liabilities. Council’s Liability As Council is a net borrower of funds and applies surplus funds to debt repayment, Management Policy focuses on borrowings as this is the most significant component investments are only maintained to meet specified business reasons. and exposes the council to the most significant risks. Other liabilities are generally non- interest bearing.

External debt ratios and limits Debt will be managed within the following macro limits: Ratio Target 30 Jun 2020 Net external debt as a percentage of equity <20% 7.28%

Net external debt as a percentage of income <150% 115.01%

Net interest as a percentage of income <15% 3.75%

Net interest as a percentage of annual rates income <20% 6.10%

Liquidity (Term Debt, Cash & Equivalents + 110%-170% 110.14% Committed Loan Facilities v Existing Debt)

There were minor breaches of the Treasury Policy which were reported to the Risk and Audit Subcommittee during the year.

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Annual Report

Disclosure Statement for the year ended 30 June 2020

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Financial Reporting and Prudence Benchmarks

Annual Report Disclosure Statement for the year ended Rates (income) affordability benchmark 30 June 20. What is the purpose of this statement? The following graph compares the Council’s actual rates income with a quantifiable limit on rates income contained in the financial strategy included in the Council’s Long Term The purpose of this statement is to disclose the Council’s financial performance in Plan. The quantifiable limit is the rates as forecast in the 2015-2025 and 2018-2028 relation to various benchmarks to enable the assessment of whether the Council is Long Term Plans. The Council’s actual rates income excludes location-specific targeted prudently managing its revenues, expenses, assets, liabilities, and general financial rates, but includes projects dependant on external funding support. This is now dealings. consistent with the calculation of the quantifiable limit on rates.

The Council is required to include this statement in its annual report in accordance with the Local Government (Financial Reporting and Prudence) Regulations 2014. Refer to the regulations for more information, including definitions of some of the terms used in this statement.

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Rates (increases) affordability benchmark Debt affordability benchmark The following graph compares the Council’s actual rates increases with a quantifiable The Council meets the debt affordability benchmark if its actual borrowing is within limit on rates increases contained in the financial strategy included in the Council’s each quantified limit on borrowing. 2015-2025 and 2018-2028 Long Term Plans. The following graphs compares the Council’s borrowing with the quantified limits on

borrowing stated in the financial strategy included in the 2015-2025 and 2018-2028 Long Term Plans. Net debt as a percentage of equity The following graph compares the Council’s actual borrowing with a quantified limit on borrowing stated in the financial strategy included in the 2015-2025 and 2018-2028 Long Term Plans. The quantified limit is net debt as a % of equity. A value of less than the quantified limit of 20% indicates compliance with the prudential limit.

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Net debt as a percentage of income Net interest as a percentage of income The following graph compares the Council’s actual borrowing with a quantified limit on The following graph compares the Council’s actual borrowing with a quantified limit on borrowing stated in the financial strategy included in the 2015-2025 and 2018-2028 borrowing stated in the financial strategy included in the 2015-2025 and 2018-2028 Long Term Plans. Long Term Plans. The quantified limit is net debt as a % of income. A value of less than 150% indicates The quantified limit is net interest as a % of income. A value of less than the quantified compliance with the prudential limit. limit of 15% indicates compliance with the prudential limit.

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Net interest as a percentage of annual rates income Liquidity The following graph compares the Council’s actual borrowing with a quantified limit on The following graph compares the Council’s actual borrowing with a quantified limit on borrowing stated in the financial strategy included in the 2015-2025 and 2018-2028 borrowing stated in the financial strategy included in the 2015-2025 and 2018-2028 Long Term Plans. Long Term Plans. The quantified limit of 20% indicates compliance with the prudential limit. The quantified limit is term debt + committed loan facilities to existing debt. Prior to

2015/16 a value of greater than the quantified limit of 110% indicated compliance with this prudential limit. The 2018-28 Long Term Plan implemented a new range for this quantified limit of between 110% and 170%.

Prior periods have been restated to align with Council’s Treasury Policy.

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Balanced budget benchmark Essential services benchmark The following graph displays the Council’s revenue (excluding development The following graph displays the capital expenditure on network services as a contributions, financial contributions vested assets, gains on derivative financial percentage of depreciation on network services. instruments, and revaluations of property, plant, or equipment) as a percentage of The Council meets this benchmark if its capital expenditure on network services equals operating expenses (excluding losses on derivative financial instruments, and or is greater than depreciation on network services. revaluations of property, plant, or equipment.

The Council meets this benchmark if its revenue exceeds its operating expenses.

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Debt servicing benchmark Debt control benchmark The following graph displays the Council’s borrowing costs as a percentage of revenue The following graph displays the Council’s net debt as a percentage of planned net debt. (excluding development contributions, financial contributions, vested assets, gains on In this statement net debt means financial liabilities less financial assets (excluding trade derivative financial instruments and revaluations of property, plant, or equipment). and other receivables). Because Statistics New Zealand projects the Council’s population will grow more slowly The Council meets the debt control benchmark if its actual net debt equals or is less than the national population rate, the Council meets this benchmark if its borrowing than its planned debt.

costs equal or are less than 10% of its revenue.

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Operations control benchmark The following graph displays the Council’s net cash flow from operations as a percentage of its planned net cash flow from operations. The Council meets the operations control benchmark if its actual net cash flow from operations equals or is greater than its planned net cash flow from operations.

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Independent Auditor’s Report

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Independent Auditor’s Report

To the readers of the Hastings District Council’s annual report for the year ended 30 June 2020

The Auditor-General is the auditor of Hastings District Council (the District Council) and Opinion its subsidiaries and controlled entities (the Group). The Auditor-General has appointed me, Karen Young, using the staff and resources of Audit New Zealand, to report on the Unmodified opinion on the audited information, excluding the non- information in the District Council’s annual report that we are required to audit under financial performance information the Local Government Act 2002 (the Act). We refer to this information as “the audited In our opinion: information” in our report. • the financial statements on pages 75 to 91 and pages 93 to 129: We are also required to report on: • present fairly, in all material respects: • whether the District Council has complied with the requirements of Schedule 10 of the Act that apply to the annual report; and • the District Council and Group’s financial position as at 30 June 2020; • the results of its operations and cash flows for the year ended on that • the completeness and accuracy of the District Council’s disclosures about its date; and performance against benchmarks that are required by the Local Government (Financial Reporting and Prudence) Regulations 2014. • comply with generally accepted accounting practice in New Zealand in accordance with Public Benefit Entity Standards; We refer to this information as “the disclosure requirements” in our report. • the funding impact statement on page 92, presents fairly, in all material respects, We completed our work on 8 December 2020. This is the date on which we give our the amount of funds produced from each source of funding and how the funds report. were applied as compared to the information included in the District Council’s annual plan; • the statement about capital expenditure for each group of activities on pages 49 to 66, presents fairly, in all material respects, actual capital expenditure as compared

to the budgeted capital expenditure included in the District Council’s annual plan; and • the funding impact statement for each group of activities on pages 49 to 65, presents fairly, in all material respects, the amount of funds produced from each source of funding and how the funds were applied as compared to the information included in the District Council’s Long-term plan.

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Qualified opinion on the non-financial performance information – our • drinking water clarity, taste, odour, pressure or flow, continuity of supply, and the work was limited with respect to the verification of the number of District Council’s response to any of these issues; and complaints for some services • sewage odour, sewerage system faults and blockages, and the District Council’s response to issues with the sewerage system; and In our opinion, except for the possible effects of the matter described in the Basis for • the performance of the stormwater system. our qualified opinion section of our report, the non-financial performance information on pages 10 to 34: These measures are important because the number of complaints is indicative of the quality of services received by ratepayers. • presents fairly, in all material respects, the levels of service for each group of activities for the year ended 30 June 2020, including: The Department of Internal Affairs has issued guidance to assist local authorities in applying the Rules, including on how to count complaints. Our audit testing found that • the levels of service achieved compared with the intended levels of service and the District Council has not been counting complaints in accordance with this guidance whether any intended changes to levels of service were achieved; and that the District Council’s method of counting was likely to have understated the • the reasons for any significant variation between the levels of service achieved actual number of complaints received both in the current year and in the comparative and the intended levels of service; and year to 30 June 2019. Complete records for all complaints made to the District Council were not available and we were unable to determine whether the District Council’s • complies with generally accepted accounting practice in New Zealand. reported results for these performance measures were materially correct. Report on the disclosure requirements We also found that the District Council’s system for classifying complaints between the above performance measures is deficient and we are unable to determine whether this We report that the District Council has: deficiency results in a material misstatement of the number of complaints reported per • complied with the requirements of Schedule 10 of the Act that apply to the annual performance measure. report; and As a result, our work was limited and there were no practicable audit procedures we • made the disclosures about performance against benchmarks as required by the could apply to obtain assurance over the number of complaints reported against these Local Government (Financial Reporting and Prudence Regulations 2014) on pages three performance measures. 140 to 146, which represent a complete list of required disclosures and accurately We carried out our audit in accordance with the Auditor-General’s Auditing Standards, reflects the information drawn from the District Council and Group’s audited which incorporate the Professional and Ethical Standards and the International information and, where applicable, the District Council’s long-term plan and annual Standards on Auditing (New Zealand) issued by the New Zealand Auditing and plans. Assurance Standards Board. We describe our responsibilities under those standards further in the “Responsibilities of the auditor for the audited information” section of this Basis for our qualified opinion on the audited information report. The District Council is required to report against the performance measures set out in We have fulfilled our responsibilities in accordance with the Auditor-General’s Auditing the Non-Financial Performance Measure Rules 2013 (the Rules) made by the Secretary Standards. for Local Government. These mandatory performance measures include the total We believe that the audit evidence we have obtained is sufficient and appropriate to number of complaints (per 1,000 properties connected) received about the following: provide a basis for our qualified opinion on the audited information.

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Emphasis of matter – Impact of Covid-19 For the budget information reported in the audited information, our procedures were limited to checking that the budget information agreed to the District Council’s annual Without further modifying our opinion, we draw attention to the disclosures about the plan. impact of Covid-19 on the District Council as set out in the Covid-19 note on page 91 to the financial statements and pages 27, 29 to 31 and 33 of the non-financial We did not evaluate the security and controls over the electronic publication of the performance information. audited information. As part of an audit in accordance with the Auditor-General’s Auditing Standards, we Responsibilities of the Council for the audited information exercise professional judgement and maintain professional scepticism throughout the audit. Also: The Council is responsible for meeting all legal requirements that apply to its annual • We identify and assess the risks of material misstatement of the audited report. information, whether due to fraud or error, design and perform audit procedures The Council’s responsibilities arise under the Local Government Act 2002 and the Local responsive to those risks, and obtain audit evidence that is sufficient and Government (Financial Reporting and Prudence) Regulations 2014. appropriate to provide a basis for our opinion. The risk of not detecting a material The Council is responsible for such internal control as it determines is necessary to misstatement resulting from fraud is higher than for one resulting from error, as enable it to prepare the information we audit that is free from material misstatement, fraud may involve collusion, forgery, intentional omissions, misrepresentations, or whether due to fraud or error. the override of internal control. In preparing the information we audit the Council is responsible for assessing its ability • We obtain an understanding of internal control relevant to the audit in order to to continue as a going concern. The Council is also responsible for disclosing, as design audit procedures that are appropriate in the circumstances, but not for the applicable, matters related to going concern and using the going concern basis of purpose of expressing an opinion on the effectiveness of the District Council and accounting, unless there is an intention to amalgamate or cease all of the functions of Group’s internal control. the District Council and the Group or there is no realistic alternative but to do so. • We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Responsibilities of the auditor for the audited information Council. Our objectives are to obtain reasonable assurance about whether the audited • We determine the appropriateness of the reported intended levels of service in the information, as a whole, is free from material misstatement, whether due to fraud or Group of Activities statement, as a reasonable basis for assessing the levels of error, and to issue an audit report that includes our opinion. service achieved and reported by the District Council. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit • We conclude on the appropriateness of the use of the going concern basis of carried out in accordance with the Auditor General’s Auditing Standards will always accounting by the Council and, based on the audit evidence obtained, whether a detect a material misstatement when it exists. Misstatements are differences or material uncertainty exists related to events or conditions that may cast a omissions of amounts or disclosures, and can arise from fraud or error. Misstatements significant doubt on the District Council and Group’s ability to continue as a going are considered material if, individually or in the aggregate, they could reasonably be concern. If we conclude that a material uncertainty exists, we are required to draw expected to influence the decisions of readers taken on the basis of this audited attention in our audit report to the related disclosures in the audited information information. or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However,

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future events or conditions may cause the District Council and the Group to cease Independence to continue as a going concern. We are independent of the District Council and Group in accordance with the • We evaluate the overall presentation, structure and content of the audited independence requirements of the Auditor-General’s Auditing Standards, which information, including the disclosures, and whether the audited information incorporate the independence requirements of Professional and Ethical Standard 1: represents, where applicable, the underlying transactions and events in a manner International Code of Ethics for Assurance Practitioners issued by the New Zealand that achieves fair presentation. Auditing and Assurance Standards Board. • We obtain sufficient appropriate audit evidence regarding the entities or business In addition to our audit and our report on the disclosure requirements, we have carried activities within the Group to express an opinion on the consolidated audited out a limited assurance engagement related to the District Council’s debenture trust information. deed, which is compatible with those independence requirements. Other than these We communicate with the Council regarding, among other matters, the planned scope engagements, we have no relationship with or interests in the District Council or its and timing of the audit and significant audit findings, including any significant subsidiaries and controlled entities. deficiencies in internal control that we identify during our audit.

Other Information

The Council is responsible for the other information included in the annual report. The other information comprises the information included on pages 3 to 161, but does not include the audited information and the disclosure requirements. Karen Young Our opinion on the audited information and our report on the disclosure requirements Audit New Zealand do not cover the other information. On behalf of the Auditor-General Our responsibility is to read the other information. In doing so, we consider whether the Wellington, New Zealand other information is materially inconsistent with the audited information and the disclosure requirements, or our knowledge obtained during our work, or otherwise appears to be materially misstated. If, based on our work, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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Statement of Compliance and Responsibility

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Statement of Compliance and Responsibility

Compliance The Council and Management of Hastings District Council confirm that all the statutory requirements of the Local Government Act 2002 have been complied with.

Responsibility 1) The Council and Management of Hastings District Council accept responsibility for the preparation of the annual Financial Statements and the judgements used in them. 2) The Council and Management of Hastings District Council accept responsibility for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting. 3) In the opinion of the Council and Management of Hastings District Council, the annual Financial Statements for the year ended 30 June 2020 fairly reflect the financial position and operations of Hastings District Council.

Sandra Hazlehurst Mayor

To’osavili Nigel Bickle Chief Executive

Dated: 8 December2020

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Equal Employment Opportunity Policy

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Equal Employment Opportunity Policy

The Hastings District Council is committed to the principle of equal opportunity in the recruitment, employment, training and promotion of its employees.

The organisation has continued to provide a welcoming, positive environment and ensured that its activities and services were carried out with an awareness of, and intent to eliminate discrimination in the area of race, colour, ethnic or national origin, gender, religion, marital status, sexual orientation, family responsibilities, age or disabilities. The Council will continue to ensure that the principles of Equal Employment Opportunity are developed, implemented, and regularly reviewed by way of appropriate programmes.

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Your Council

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Directory of Council as at 30 June 2020

SANDRA TANIA HAZLEHURST KERR BAYDEN ALWYN MALCOLM Mayor Deputy Mayor BARBER CORBAN DIXON

027 418 6602 027 241 4758 021 570 011 021 462 276 027 203 1011 [email protected] [email protected] [email protected] [email protected] [email protected] Mohaka Ward Hastings – Havelock North Ward Heretaunga Ward Hastings – Havelock North Ward

DAMON EILEEN SIMON HENARE PELETI HARVEY LAWSON NIXON O’KEEFE OLI

021 288 6772 027 300 7631 027 442 4121 027 4321 890 021 230 3653 [email protected] [email protected] [email protected] [email protected] [email protected] Hastings – Havelock North Ward Hastings – Havelock North Ward Hastings – Havelock North Ward Flaxmere Ward Flaxmere Ward

ANN WENDY SOPHIE GERALDINE KEVIN REDSTONE SCHOLLUM SIERS TRAVERS WATKINS

027 386 7907 021 519 150 021 0820 0788 021 048 4184 027 304 6213 [email protected] [email protected] [email protected] [email protected] [email protected] Heretaunga Ward Hastings – Havelock North Ward Kahuranaki Ward Hastings – Havelock North Ward Hastings – Havelock North Ward

Heretaunga Takoto Noa Māori Standing Committee Mr Jerry Hapuku (Kaumātua) Ms Tania Eden Council representatives: Mr Robin Hape (Chair) Mr Mike Paku Cr Bayden Barber (Deputy Chair) Cr Henare O’Keefe Cr Ann Redstone Ms Marei Apatu Ms Ngaio Tiuka Mayor Sandra Hazlehurst Cr Peleti Oli Cr Geraldine Travers

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Directory of Rural Community Board as at 30 June 2020

NICK DAWSON SUE JONATHAN MARCUS (CHAIR) MAXWELL STOCKLEY BUDDO

027 354 5562 021 131 5925 027 241 1144 021 352 424 Council appointees: [email protected] [email protected] [email protected] [email protected] Cr Tania Kerr Kaweka subdivision Tutira subdivision Maraekakaho subdivision Poukawa subdivision Cr Sophie Siers

Directory of Senior Management

TO’OSAVILI BRUCE BRONWYN CRAIG NIGEL BICKLE ALLAN BAYLISS CAMERON

06 871 5002 06 871 5019 06 871 5026 06 871 5505 [email protected] [email protected] [email protected] [email protected] Chief Executive Group Manager Group Manager Group Manager Corporate People and Capability Economic Growth & Organisation Improvement

DENNISE NAOMI CRAIG JOHN ELERS FERGUSSON THEW O’SHAUGHNESSY

06 871 5100 06 871 5000 06 871 5041 06 871 5035 [email protected] [email protected] [email protected] [email protected] Acting Group Manager Group Manager Group Manager Group Manager Community Facilities & Programmes Marketing and Communications Asset Management Planning & Regulatory Services

ADVISORS Dr James Graham, Pou Ahurea Matua Graeme Hansen, Director Scott Smith, General Counsel Principal Advisor: Relationships, Responsiveness & Heritage Major Capital Projects Delivery

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Statistical information (Council only)

2019 2020

522,893ha Land Area 522,893ha Source – Statistics NZ 73,245 Population (2018 Census) Source – Statistics NZ 81,537 Land Value $9,489,517,700 Valuations (Net) Land Value $14,389,770,900 Improvements $8,918,575,050 Improvements $12,024,481,850 Capital Value $18,408,092,750 Capital Value $26,414,252,750 Permanent Staff 364 Employee Numbers as at 30 June Permanent Staff 393 32,875,116 Total Salary & Wages $34,223,282 $147,827,000 Gross Public Debt $150,740,000 $4,720 Gross Debt per Rateable Assessment $4,777 Sealed Road 1,304.33 Roading (km) Sealed Road 1,319.10 Unsealed Roads 338.97 Unsealed Roads 332.70 State Highways 198.40 State Highways 198.40 Rateable Assessments 31,316 Rateable Assessments 31,554 $89,303,843 Rates Levied (incl GST) $94,547,237

Average Rate Average Land Value Analysis by Differential Category Average Rate Average Land Value Rating Area 1 (Urban) $2,413 $155,045 Residential $2,552 $154,962 $2,093 $253,189 Residential Non Urban $2,221 $257,767 $1,991 $179,124 Residential Clive $2,094 $179,016 $3,196 $629,022 Horticulture/Farming $3,317 $634,174 $18,101 $1,140,000 Chartered Clubs $18,852 $1,140,000 $12,283 $496,047 Commercial (CBD) $12,853 $493,509 $8,951 $417,161 Other Commercial $9,327 $415,477 $8,373 $486,847 Commercial Non Urban $8,671 $493,369 Rating Area 2 (Rural) $1,331 $254,503 Residential $1,389 $249,612 $1,800 $274,942 Commercial $2,005 $282,953 $2,986 $885,173 Lifestyle/Horticulture/Farming $3,089 $878,147

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Glossary of terms

Budget Refers collectively to the figures in the Annual Plan or Ten year Plan (LTP), including forecasts and projections.

Capital Expenditure Relates to the creation or enhancement of assets for the purpose of improving existing or providing new services to the community.

Carry Forwards Are projects which, for various reasons, are unable to be completed during the year in which they were budgeted and will be undertaken in the next plan year (e.g. projects not completed in [2017/18 will be ‘carried forward’ to 2018/19]). Funding allocated to each project will also be carried forward.

Depreciation Is a value, which represents the wearing out of an asset over time.

Objectives Identify short-term targets relating to the plan period.

Operating Expenditure Is expenditure, which is used for the operation and maintenance of Council assets that are used in the provision of services to the community.

Overheads Are defined as administrative costs incurred for the common benefit of more than one centre of activity. The Council has attempted to show the true cost of providing services and amenities by adding overheads to the basic cost components.

Performance Indicators Are measures by which the Council’s performance is to be measured.

Rating Area 1 Includes all of the Urban Areas, all of the former Plains Areas, and 10.27% of the former Rural Areas.

Rating Area 2 Covers the remaining 89.73% of the Rural Area.

Significant Activity Identifies a grouping of Council activities or functions into a major category for the purpose of reporting in the Annual Plan and Annual Report.

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Abbreviations

AWPT Area Wide Pavement Treatment IFRS International Financial Reporting Standards

BPS Basis Points LATM Local Area Traffic Management

CBD Central Business District LGA Local Government Act 2002

CCO Council Controlled Organisation. LTP Long Term Plan or Ten Year Plan This is a term for an organisation where local authorities hold a controlling interest. CR Councillor LOS Level of Service

DRA 1 District Rating Area One (Urban Area) NBS National Building Standard

DRA 2 District Rating Area Two (Rural Area) NCC Napier City Council

DWSNZ Drinking Water Standards New Zealand NZGAAP New Zealand Generally Accepted Accounting Principles

EERST Environmental Education for Resource Sustainability NZTA New Zealand Transport Agency

EPB Earthquake-Prone Building PA Per Annum

FRS Financial Reporting Standard PSGE Post Settlement Governance Entities

GST Goods and Services Tax PTSG Post Treaty Settlement Groups

HBRC Hawke’s Bay Regional Council QRA Quantitative Risk Assessment

HCAG Hastings City Art Gallery SHBT Sustaining Hawke’s Bay Trust

HDC Hastings District Council UAGC Uniform Annual General Charge

HPMV High Productivity Motor Vehicle VDAM Vehicle Dimension and Mass

HPUDS Heretaunga Plains Urban Development Strategy

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